Home prices fall in most cities
Home prices are falling in most major U.S. cities, and the average price in four of them is at an 11-year low. Analysts expect further price declines in most cities in the coming months.
The Standard & Poor’s/Case-Shiller index released Tuesday shows home prices dropped in 19 cities from December to January. Eleven of them are at their lowest level since the housing bust, in 2006 and 2007. The index fell for the sixth-straight month.
Home values in Atlanta, Las Vegas, Detroit and Cleveland are below January 2000 levels. A majority of the metro areas tracked by the index have home prices at levels dating back to 2003, just as the housing boom began.
The only market where prices rose was Washington, where home prices gained 0.1 percent month over month.
“The housing-market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s.
The housing market remains the heaviest burden on the economy, which is showing signs of strength elsewhere. Unemployment-benefit applications are at pre-recession lows, consumers are spending more money, and manufacturing activity is growing at its fastest rate in seven years.
By contrast, the housing market is coming off its worst year in more than a decade for sales of previously occupied homes and its worst in a half-century for sales of new homes.
High unemployment and tighter lending requirements have kept many people from entering the market. A record number of foreclosures and short sales — when the lender agrees to accept less than what the buyer owes on the mortgage — are pulling down home values. Many would-be buyers are waiting on the sidelines, fearing that the market has yet to bottom out.
“A lot of people are thinking the best thing to do is to stay put or delay until conditions improve,” said Jonathan Basile, economist at Credit Suisse Securities.
The pain is not uniform. It is worse in cities flooded by foreclosures and short sales. That includes Detroit and Cleveland, which are struggling with weak local economies. Miami, Phoenix, Las Vegas and Atlanta are reeling from overbuilding during the housing boom.