"Home Prices Are About to Bottom" was the headline for the Barron's cover story the week of July 14, 2008. The story explained that the housing market should level off in many areas of the country by the end of the year.

I have made some equally unfortunate prognostications in my tenure at BloggingStocks, so my purpose is not to poke fun at Barron's but to point out that here we are, over two years later, and it is still debatable whether the housing market has bottomed out.

What started as a subprime mortgage mess has morphed into a much larger problem of home value destruction. Houses have now lost value for the seventh consecutive quarter with no end in sight. Are we anywhere near an end to this carnage?

No one knows for sure. That's because we are no longer looking at loans gone bad because people overextended themselves; we are now looking at such a significant fall in house prices that about 30% of homes that were sold in the third quarter were sold at a loss. That's up from 23.7% in the second quarter. We are no longer just dealing with people who made bad credit decisions, we are also dealing with the fallout from massive layoffs and the financial hardships that follow.

Houses being sold now are primarily foreclosures or short sales, but people who must move because of a job loss or for other personal reasons can only do so if they are willing to sell at the same distressed prices. So if you don't need to sell, don't. Unfortunately, as job losses continue to mount, more and more people will be forced to sell, driving prices even lower.

Home prices fell in a record number of U.S. metropolitan areas in Q4 2007, the National Association of Realtors announced Thursday, in a statement.

Prices fell in 77 of 150 metropolitan areas tracked, the most since the NAR start tracking values in 1979. Moreover, 16 metro areas recorded declines of 10% or higher.

U.S. median home price declines

Meanwhile, on a year-over-year basis, the U.S. median home price also declined 5.8% in Q4 2007 to $206,200 compared to $219,000 in Q4 2006. Even more telling, home prices have declined more than 10% since their July 2006 peak.

The metropolitan area with the biggest decrease was Lansing- East Lansing, Michigan, which recorded a 19% decline. Prices fell 18.5% in the Sacramento, California region and 17% in Riverside and San Bernardino, California, and in the Jackson, Mississippi, region, the NAR announced.

Home prices fell in every region. The regional totals: West, down 8.7% to $324,100; Northeast, down 4.8% to $261,700; South, down 8.7% to $171,700; and the Midwest, down 3.2% to $156,300.

Sales contracts of previously-owned homes plunged -2.6% in November 2007, a stat that suggests the contraction in the housing sector will persist in the immediate months ahead.

The National Association of Realtors announced that the pending home index, which tabulates contracts signed for homes but not closed, fell 2.6% in November 2007. Economists had expected a 0.7% decline in November 2007. The index rose in September 2007 and October 2007.

Further, the index declined 19.2% during the previous 12 months. The index declined in 3 regions: -13% in the Northeast, -4.1% in the Midwest, -2.1% in the West, but increased +2.3% in the South.

If Chicago Mercantile Exchange traders are betting right, housing prices in ten key housing markets will continue to drop until 2011 [subscription required], according to the Wall Street Journal this morning. The Miami area is the worst hit and expectations are that it will drop another 27.9% between November 2007 and November 2011. Others expected to fall in the same time period include San Francisco (down 25.9%), San Diego (down 18.6%) Las Vegas (down 18.1%), Los Angeles (down 15%), Denver (down 14.4%), Boston (13.8%), Washington, D.C. (down 13.3%), New York (12.1%) and Chicago (down 6.6%).

The CME contracts are based on expected movements of the S&P/Case-Shiller house price indexes. Trading is light, so this report gives us a less-than-scientific view of what might happen in the housing market. Personally. I believe this might be too gloomy a prediction. While prices do still need to drop in most of the areas currently facing a decline in order to get the markets moving again, I'm not sure they need to drop as much, nor for as long.