After weeks of relatively good news on the housing front, the S&P/Case-Shiller home price index reminds us we're not out of the woods just yet. Home values have reached new lows, according to the report released Tuesday.
Housing prices are at their lowest levels since mid-2006. The national composite fell by 3.8 percent during the fourth quarter (Q4) of 2011, and was down 4 percent year-over-year. Both the 10- and 20-city composites fell by 1.1 percent from November to December 2011, and fell 3.9 and 4 percent year-over-year.
Atlanta posted the lowest annual return, with prices falling 12.8 percent since December 2010. Detroit was the only city to post a positive return, up 0.5 percent year-over-year, despite a 3.8 percent decrease in prices from November to December 2011.
Miami and Phoenix posted slightly-positive monthly returns, with increases of 0.2 and 0.8 percent from November to December 2011. Both cities still saw negative change year-over-year.
"In terms of prices, the housing market ended 2011 on a very disappointing note," David M. Blitzer, chairman of the Index Committee at S&P Indices, said in a press release Tuesday. "With this month's report we saw all three composites hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended."
Up until today's report, Blitzer believed the low period was behind us. This new data reveals that may not be the case.
"In general, most of the regions also posted weak data in December. Eighteen of the cities saw average home prices fall in December over November. Seventeen of the cities have seen monthly declines for at least three consecutive months. In addition to both monthly composites, 10 of the cities saw home prices fall by more than 1 percent during the month of December. The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012."
This is bad news, but it's not a complete shock. The recent settlement between big banks and the states' attorneys general was on lenders' radar before the public announcement, and it's possible the banks ramped up foreclosures assuming the deal would go through.
The settlement could mean the downturn in prices will continue through 2012. It gives lenders a framework for how to handle foreclosures correctly, which means it's possible we'll see more of them on the market in the near future.
That said, any additional lawsuits against lenders, which they are not protected from under the terms of the settlement, could mean foreclosure bottlenecks in individual markets. That means foreclosures driving -- and keeping -- home prices down for a while longer.