Home prices hit post-boom lows: What does that mean for housing market?

Just when prognosticators were starting to get more optimistic about a housing recovery comes this news: A major index of US home prices fell to new post-boom lows during in the first quarter.

Does this mean all the hopes for a springtime of renewal in the housing market are being dashed?

Not really. Many housing analysts see the market in a period of bottoming out and stabilizing after the deep recession. The numbers from the Standard & Poor's Case-Shiller Home Price Index don't contradict that view.

But the home-price dip is a reminder that the stabilizing process has been slow and arduous, and that it's not over. This important sector of the economy – which typically helps lead the way out of recessions – still has plenty of problems to work through.

Here's Tuesday's data: The S&P Case-Shiller index of home prices nationwide edged down to a level of 123.33 in the first quarter of this year, down 35 percent from its 2006 peak. Prior to the housing boom, in January 2000, this index stood at 100. 

The brighter side to the Case-Shiller data: Among the major locales in a 20-city Case-Shiller index, 12 saw average prices rise in March, compared with the month before. Only seven of the cities saw price declines for the month, while one was flat. 

Just as important, the price swings during the past year have been modest in most of the cities. Seven cities posted price gains during the past year, in the Case-Shiller survey. Among those showing price declines, the only cities showing declines larger than 4 percent were Los Angeles (4.8 percent), Phoenix (6.1 percent), Chicago (7.1 percent), Las Vegas (7.5 percent), and Atlanta (17.7 percent). 

What's up in Atlanta? In part it's a delayed response. In hindsight, the city overbuilt during the boom, like many other cities around the nation that had strong population growth. Unlike, say, in Miami or Las Vegas, in Atlanta some of the worst fallout for home prices has come just in the past year. 

But the examples like Atlanta are the exception, not the rule. The National Association of Realtors recently said that some cities now have something more like a "seller's market," with tight supply of for-sale homes relative to demand. Those include Miami, Phoenix, Seattle, and Washington, the group said.

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