U.S. home prices fall 9% in the last year

Posted Nov 18th 2008 2:30PM by Joseph Lazzaro
Filed under: Forecasts, Bad News, Housing, Recession

When is a near double-digit decline in home prices viewed as a small victory? When you're the United States in late 2008 -- a nation grappling with its worst housing slump in decades amid signs of a deepening recession.

U.S. median home prices fell 9% in Q3 compared to a year earlier, to $200,500, the National Association of Realtors announced Tuesday. Prices fell in 120 U.S. metro areas, rose in 28 and were flat in four.

California registers major declines

The largest decline in home prices occurred in California: the Riverside-San Bernadino area recorded a 39.4% decline, to $227,200; the Sacramento area, a 36.8% decline to $212.000; and the San Diego area, a 36% plunge to $377,300.

At the other end of the spectrum, prices rose 12.5% in Elmira, N.Y, and 8.7% in Decatur, Illinois.

Economist Peter Dawson said today's NAR statistics represents more, sobering data from the housing sector, but in the broader context the report is not as bad as the quarterly data implies.

"We're down 9%, but it's less than what most feared, so that's a positive development, sort of," Dawson said. "We've experienced so many jolting, double-digit price declines in home prices and other negative stats from the sector that anything less than the truly abysmal looks modest, and that's the case with the Q3 NAR data."

Still, Dawson did not want to delude anyone regarding the timetable for a housing sector recovery. "This most recent data doesn't delay the housing sector's recovery, but it doesn't bring it any closer either. We're still looking at a housing sector in recession through at least the end of Q2 2009, and most likely well beyond that," Dawson said. ""Housing will continue to take away from U.S. GDP for at least six to eight more months."

Housing Sector Analysis: As economist Dawson noted, the Q3 NAR is a negative data point, but it could have been worse. And investors and economists have seen worse during this economic downturn. Relativism aside, this most recent data provides further evidence that they'll be no growth coming out of the housing sector through mid-2009, which is all the more reason why the U.S. must find other engines of economic growth, including fiscal stimulus, to get the U.S. economy on the growth track again.

Tags: housing, inthenews, median home prices, National Association of Realtors