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Phoenix housing prices continue to decline, index shows


October 23, 2008

Phoenix-area home prices fell in July for the 17th consecutive month, tying a record for prolonged declines set more than a decade ago.

The Arizona State University-Repeat Sales Index shows average metro Phoenix home prices declined by 24 percent from July 2007 to July 2008. It was the fifth month in a row that home prices declined by double digits.

The Phoenix area has seen house prices drop for 17 straight months now, a string of declines equaled only during the last serious real estate recession in Arizona in the early 1990s.

On a positive note, the rate of decline in home sale prices continues to level off, says Karl Guntermann, the Fred E. Taylor Professor of Real Estate at the W. P. Carey School of Business at Arizona State University. Even though the year-over-year percentage drop was steep in July, the rate of decline was only 1 percent faster than in June.

But prices still are nowhere near to bottoming out, Guntermann says. In fact, he says preliminary figures indicate that average sale prices continued the downward trend in August and September.

“The good news of a slowing rate of decline must be tempered with the realization that the decline may not level off until the RSI is down close to 30 percent from the prior year,” says Guntermann, who compiles the ASU-RSI with research assistant Alex Horenstein. “It probably will take months for the index to move up to zero, which would mean that house prices have stopped declining from one year ago.”

The biggest year-over-year drop in July – 36 percent -- was recorded in the Southwest Valley. The smallest decline was 14 percent, recorded in the Northeast Valley.

The ASU-RSI is based on repeat sales, the most reliable way to estimate price changes in the housing market. Repeat sales compare the prices of a single house against itself at different points in time, instead of comparing different homes with different quality factors.

The ASU-RSI is produced through the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. The current report and archived previous reports are available at the Division of Real Estate - Repeat Sales Reports.