The Globe and Mail
U.S. home prices are falling again in most major cities after posting small gains over the summer and spring, the latest evidence that the troubled housing market won’t recover any time soon.
The Standard & Poor’s/Case-Shiller index released Tuesday showed prices dropped in September from August in 17 of the 20 cities tracked. That was the first decline after five straight months in which at least half the cities in the survey showed monthly gains.
A separate index for the July-September quarter shows prices were mostly unchanged from the previous quarter.
David M. Blitzer, chairman of S&P’s index committee, said that while the steep price declines seen between 2007 and 2009 appear to be over, home prices are down from the same time last year and do not show signs of easing.
“Any chance for a sustained recovery will probably need a stronger economy,” Mr. Blitzer said.
Atlanta, San Francisco and Tampa, Fla. posted the biggest monthly price declines. Prices in Atlanta, Las Vegas and Phoenix fell to their lowest points since the housing crisis began four years ago. Blitzer called the new lows reached in those three cities a “bit disturbing.”
Prices rose in New York, Portland, Ore. and Washington.
Americans are reluctant to purchase a home more than two years after the recession officially ended. High unemployment and weak job growth have deterred many would-be buyers. Even the lowest mortgage rates in history haven’t been enough to lift sales.
Some people can’t qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that prices will keep falling.
Sales of previously occupied homes are on pace to match last year’s dismal figures – the worst in 14 years. And sales of new homes are shaping up to be the worst since the government began keeping records a half century ago.
“Despite record high affordability of real estate, the psychology of home buyers is still being weighed down by economic uncertainty, keeping them on the fence when it comes to buying homes,” said Stan Humphries, chief economist at Zillow.com, which measures home values.
The Case Shiller index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The September data is the latest available.
Prices are certain to fall further once banks resume millions of foreclosures. They have been delayed because of a year-long government investigation into mortgage lending practices.
Home prices had stabilized in coastal cities over the past six months, helped by a rush of spring buyers and investors. But this year, prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.
Foreclosures and short sales – when a lender accepts less for a home than what is owed on a mortgage – are selling at an average discount of 20 per cent.