U.S. House-Price Slide Eases, S&P/Case-Shiller Shows

By Courtney Schlisserman

(Corrects second paragraph to show 15.9 percent drop was from a year before.)

Aug. 26 (Bloomberg) -- U.S. house prices declined at a slower pace for the fourth straight month in June, signaling that the worst housing slump in more than 25 years may be starting to stabilize.

Home prices in 20 U.S. metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May, the S&P/Case-Shiller index showed. Prices were down 15.9 percent from the previous year, less than economists had forecast.

The figures add evidence that the drag on the economy from the housing slump is lessening, while officials and analysts predict that a rebound remains at least a year away. A private report yesterday showed that sales of existing homes in the past three months averaged the same rate as the previous period.

``We're seeing a slowing in the pace of home-price depreciation,'' said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. ``The middle of next year is when we would expect to see some improvement.''

Treasuries, which had fallen earlier in the day, stayed lower after the report, pushing benchmark 10-year note yields up to 3.80 percent at 9:38 a.m. in New York, from 3.79 percent late yesterday.

Quarterly Drop

S&P/Case Shiller also released quarterly figures for nationwide home prices. That measure showed a 2.3 percent drop in the three months through June from the previous three months, compared with a 6.8 percent decline in the first quarter.

Economists forecast the 20-city index would fall 16.2 percent from a year earlier, according to the median of 26 forecasts in a Bloomberg News survey. Estimates ranged from declines of 17.3 percent to 15.9 percent.

Compared with a year earlier, all 20 areas showed a decrease in prices in June, led by a 29 percent drop in Las Vegas and a 28 percent decline in Miami.

``While there is no national turnaround in residential real estate prices, it is possible that we are a seeing some regions struggling to come back, which has resulted in some moderation of price declines at the national level,'' David Blitzer, chairman of the index committee at S&P, said in a statement.

Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

Other reports show price declines continue. The National Association of Realtors said yesterday that the median price of an existing home fell 7.1 percent in July from a year earlier, compared with a 6.1 percent drop in June.

Resales Rise

The Realtors group also said that resales increased from a 10-year low and the supply of unsold homes rose. There was a record 4.67 million unsold houses and condos on the market in July, representing 11.2 months' supply at the current sales pace, matching the highest rate ever.

The Commerce Department is scheduled to release its report on July new home sales later today. The figures will include information on prices and inventory.

The price gauges from Commerce and the Realtors group can be influenced by changes in the regional composition or types of homes sold. Purchases in areas with more expensive homes relative to cheaper properties will bias the figures up.

In contrast, the S&P/Case-Shiller index, and another by the Office of Federal Housing Enterprise Oversight, track the same houses over time and more accurately reflect price trends, economists said. The Ofheo figures are due at 10:00 a.m.

Bargain Hunting

Some companies are already seeing a pickup in interest because of lower prices.

``Buyers are coming back into the market,'' Tom McCormick, president of Astoria Homes, said in a Bloomberg Television interview last week. ``Remarkably low'' prices do ``seem to be bringing people in off the sidelines.''

Even so, tight credit conditions and ongoing declines in residential construction will weigh on economic growth in coming months, Federal Reserve policy makers said at their Aug. 5 meeting. The Fed's quarterly survey of bank loan officers showed 75 percent had made it tougher for prime borrowers to get a mortgage, more than in the April survey.

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net