U.S. home prices drop 6.1% in past 12 months

Posted Dec 26th 2007 12:15PM by Joseph Lazzaro
Filed under: Bad News, Economic Data, Housing

Home prices fell 6.1% in the past 12 months -- the largest 12-month decline in at least six years, and a sign that the housing market remains in a pronounced slump, research from the S&P/Case-Shiller home price index indicated Wednesday. In the survey, all 20 metropolitan markets surveyed showed year-over-year price declines.

Analyst C. Leonard Bauer, formerly of Prudential, told BloggingStocks on Wednesday that the October 2007 Case-Shiller data confirms some of the worst fears analysts have about the U.S. housing market heading into 2008.

"This is a sobering statistic," Bauer said. "It confirms a housing market in a deep slump. This is the worst year-over-year decline in prices that I've seen nationally, and I've been following housing for 20 years. The northeast [U.S.] condo slump in the early 1990s saw bigger percentage drops but that was only one section of the market. This is across the board."

Bauer added that he had expected a year-over-year decline for October 2007 of about 2-4%. Bauer said he now expects both foreclosures and the backlog of unsold homes to increase in Q1 and Q2 2008.

"The supply of unsold homes nationally is at 9-10 months, depending on the data you look at, and this price decline will cause that backlog to increase, and the number of foreclosures will increase, also," Bauer said. "Some owners will drop their prices and sell, but many won't, which will drive the backlog higher. On the refinance front, if we can get a decent mortgage assistance package out of Congress, that will reduce the number of foreclosures some, but they haven't passed a package yet."

Earlier this fall, the Bush Administration announced a legislative package aimed at freezing interest rates for some adjustable rate mortgages scheduled to reset in 2008, as well as other programs aimed at lowering the number of foreclosures. Authored by the U.S. Treasury Department, the proposal is expected to be reviewed by both U.S. House and Senate committees beginning in January 2008.

Tags: Bush Administration, Case Shiller, foreclosures, housing, housing prices, housing sector, interest rates, inthenews, mortgage rates, mortgages, Paulson, Shiller, subprime mortgages, U.S. Congress, U.S. economy, U.S. Treasury Department

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Reader Comments (Page 1 of 1)

12-26-2007 @ 2:54PM

william lindblad said...

Tip of the iceberg and it is not confined to the U.S. Prices are dropping in the U.K. as well. It is the result of a "Gold rush" mentality prompted by the prospect of quick and easy profit. The bubble burst and the losses are staggering. Default is on the rise in housing, credit cards and auto loans. Layoffs and high unemployment appear to be in the near future which will only make this mess worse.