Home prices plunge record 18.5% in the past year, Case-Shiller says

Posted Feb 24th 2009 3:07PM by Joseph Lazzaro
Filed under: Housing, Recession

Once again, there's been little change in the slump that's plagued the U.S. housing sector and economy for more than two years.

Home prices in the United States in 20 cities declined at the fastest pace ever in the past year, weighed down by foreclosures, and bank efforts to unload that housing.

Home prices in a 20-city sample plunged a record 18.5% in December 2008, on a year-over-year basis in, according to the S&P / Case-Shiller U.S. National Home Price survey. The index has fallen every month since January 2007. Home prices fell 18.2% in November, 18% in October, 17.4% in September, and 16.6% in August, each on a year-over-year basis.

U.S. home prices: coast-coast declines

Also, every city in the 20-city index registered a decrease in December 2008, on a year-over-year basis.

Further, prices in a 10-city survey plummeted a record 19.2% on a year-over-year basis.

Economists surveyed by Bloomberg News had expected home prices in the 20-city Case-Shiller survey to decline 18.3% in December 2008 on a year-over-year basis.

The areas with the largest, annual percentage declines were: Phoenix, -34.0%, Las Vegas, -33.0%, San Francisco, -31.2%, Miami, 28.8%, Los Angeles, -26.4%, and San Diego, -24.8%.

Year-over-year percentage price changes in other, major U.S. cities were as follows: New York, -9.2%, Chicago, -14.3%, Boston, -7.0%, Washington, D.C., -19.2%, Atlanta, -12.1%, Denver, -4.0%, and Seattle, -13.4%.

Housing Sector Analysis: Obviously, very poor housing sector conditions persist. About the only positive - - if one can call it that - - in the report is that the decline in prices appears to be moderating, but we'll need several more months to confirm that tendency. Still, this is another abysmal housing report, as homebuyers remain sidelined on the U.S. economy's weakness, concerns about future lay-offs, and the belief that housing prices will continue to decline.

Further, some Americans may oppose a federal plan to refinance mortgages of homeowners at risk of default, but if that program is not put in motion, it's unlikely the U.S. housing market will experience a bottom this year, given the enormous inventory (more than 10 months) of unsold new / existing homes, many economists agree. Foreclosures will only hinder the U.S. economy's ability to work-off that excess supply. Typically, a healthy market has a three- to four-month supply of homes on the market.

Tags: Case-Shiller, home prices, housing, inthenews, median home prices