Distressed property sales disguise marginal drop in US house prices

US property prices fell by 0.4 per cent in
August from the previous month, according to August’s Home Price Index. The
decline, which is the first drop in four months, suggests that worries about a
double-dip recession are perhaps justified, but distressed property sales are
masking the true figures.

Overall, the year on year change in house
prices has seen values fall by 4.4 per cent. But if you exclude distressed property sales
from the figures, including short sales, the reduction is actually only 0.7 per
cent.

The marginal decline in market prices
paints a more positive picture of the US housing industry, as the economy
continues its slow recovery. CoreLogic, producers of the Home Price Index
(HPI), spoke to Property
Wire:

“The slight month on month decline was
predictable, particularly given the renewed concerns over a double dip
recession, high negative equity, and the persistent levels of shadow
inventory,’ said chief economist Mark Fleming, adding: “The continued bright
spot is the non distressed segment of the market, which is only marginally
lower than a year ago and continues to exhibit relative strength.”

Comparing the HPI of August 2011 to April
2006, Property Wire notes that values have dropped by 30.5 per cent. However,
excluding distressed property
sales, the difference is a smaller 21 per cent. As August’s report shows
fewer areas experiencing year on year declines, the progress of America’s
housing market continues to be supported – and masked by – distressed homes.