US house prices carry on falling

Every month, it seems, the US housing market gets worse. Spring should have provided some respite, as it is the peak time for sales. But instead, as the chart shows, the benchmark S&P/Case-Shiller house price index fell again to a new record low, and is now 14% below this time last year. ‘There are very few silver linings that one can see in the data’, said S&P, adding that ‘most of the nation appears to be on a downward path’. They calculate that the current downturn far exceeds that of 1990-1, when ‘the annual rate bottomed at -2.8%’.
Equally, US auto markets are facing their worst year in over a decade. Sales are expected to be 15 million this year, versus 16.2 million last year. Home equity loans used to fund nearly 10% of new car sales, but are increasingly difficult to obtain as house prices fall. Auto lenders have also become increasingly wary, as their losses are now 30% higher than in 2002, at the bottom of the last downturn. And used car prices are down 6% already this year, putting further pressure on the industry.
The outlook for chemical sales into these two critical markets seems likely to become increasingly difficult as we move through the rest of year.