WASHINGTON — Don’t take the latest snapshot of U.S. home prices too seriously.
The Standard & Poor’s/Case-Shiller 20-city index released Tuesday ticked up in July from June. But the gain is merely temporary, analysts say. They see home values taking a dive in many major markets well into next year.
That’s because the peak home-buying season is now ending after a dismal summer. The hardest-hit markets, already battered by foreclosures, are bracing for a bigger wave of homes sold at foreclosure or through short sales. A short sale is when a lender lets a homeowner sell for less than the mortgage is worth.
Add high unemployment and reluctant buyers, and the outlook in many areas is bleak. Nationally, home values are projected to fall 2.2 percent in the second half of the year, according to analysts surveyed by MacroMarkets LLC. And Moody’s Analytics predicts the Case-Shiller index will drop 8 percent within a year.
Las Vegas, which led all declines in the latest report, is expected to post a 6 percent drop. Home values there have already tumbled 57 percent from their peak four years ago.
Other areas likely to endure big price drops, according to Veros, a real estate analysis company, are Port St. Lucie, Fla., and Reno, where prices could fall 7 percent over the next year and Orlando and Daytona Beach, Fla., which face price drops of at least 6 percent.
Las Vegas has been hit by foreclosures and the loss of tourism and construction jobs. More than 70 percent of homeowners there owe more on their mortgages than their homes are worth, according to real estate data firm CoreLogic .
Housing analyst Larry Murphy of Las Vegas-based SalesTraq research firm estimated that home prices could fall as much as 10 percent this year, but it’s really anybody’s guess.
“I don’t disagree with any of that, I really can’t,” Murphy said of the national report. “I will say that I have read and reread Case-Shiller’s methodology and my numbers don’t always agree with theirs.”
Murphy reported a median new-home price of $218,000 in August, up 3.3 percent from a year ago, and resale median price of $120,000, up 4.3 percent from a year ago. His statistics are based on actual closings recorded at the Clark County Recorder and Assessor offices.
Case-Shiller looks only at single-family home “pairs,” or the sale of a home compared with the previous sale of the same home. If they can’t find it, they don’t use it, Murphy said. Also, the time span between those pairings could be one year, five years or 10 years, he said.
Further, Case-Shiller only counts homes that are financed through Freddie Mac or Fannie Mae. For the past year, 40 percent to 50 percent of Las Vegas home sales have been cash transactions, Murphy said.
Prices have risen nearly 7 percent nationally from their April 2009 bottom. Yet they remain nearly 28 percent below their July 2006 peak.
Most experts predict about 5 million homes will be sold this year. That would be in line with last year and just above 2008, the worst sales performance since 1997.
The latest changes in the Case-Shiller national index represent a three-month moving average — for May, June and July. Sales in May and June were inflated by government tax credits that have since expired.
July was the worst month for home sales in 15 years. August wasn’t much better. The record number of foreclosures, job concerns and weak demand from buyers have combined to weigh down prices.
“The market, at best, is weak, and starting to decline,” said Michael Feder, chief executive of Radar Logic Inc., which tracks the housing market.
Review-Journal writer Hubble Smith contributed to this report.