Home prices declined in August on a month on month and year on year basis, according to the report.
Although recent housing metrics, such as home sales, housing starts and builder confidence, may initially appear to be positive they reveal the fundamental weakness of the market when viewed in context, the company said.
The 25 metropolitan-area RPX composite price fell 0.8% in August, the largest drop for this time of year since the crash of 2008. Prices declined 4.7% relative to August 2010.
‘We continue to see the negative effects of the supply/demand imbalance in housing. Until we truly begin to deal with it, the numbers will reflect the fundamental weakness in housing markets,’ said Michael Feder, president and chief executive officer of Radar Logic.
The index's 25 MSA transaction count increased 13% year on year through August. However, rather than indicating an increase in housing demand, the gain is a function of the unusual timing of home purchases last year due to the homebuyer tax credit, Radar Logic said.
Home sales peaked early in 2010 and declined rapidly thereafter as homebuyers moved up their purchases to qualify for the tax credit.
As a result, there were significantly fewer sales in August 2010 than is typical. This year home sales followed the seasonal pattern more closely, with sales remaining relatively high through August, thus the disparate rates in the annual comparison.
The impact of the tax credit on year on year growth figures will diminish as the year progresses, Radar Logic said.
When comparing the prior month, the 25 metropolitan-area RPX transaction count declined 5.2% in August from July, a relatively large decline for this time of year.
Meanwhile the next Case-Shiller 20 city composite home price index, scheduled to be released today (Tuesday 25 October) is expected to show a year on year decline of 3.8% in prices and a monthly fall of 0.3% from July.
The company’s chief economist Stan Humphries has already said that the current downward trend will continue through to the end of the year. ‘We expect to see continued home value depreciation as unemployment and negative equity remain high,’ said Humphries.
‘After showing monthly appreciation earlier this year and building some momentum, recent weak economic data is starting to be reflected in home values. Existing home sales have been disappointing, with September sales down 3% from August,’ he added.
