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U.S. home prices down 18%

Home values in the 20 largest metropolitan areas in the U.S. dropped at a record pace in October as the fallout from the financial collapse reverberated through the housing market, according to data released yesterday. The price of single-family homes fell 18 per cent in October from a year earlier, according to the closely watched Standard & Poor's/Case Shiller Housing Index.

All 20 cities reported annual price declines in October; prices in 14 of the 20 metropolitan areas surveyed fell at a record rate as the financial crisis reached a critical point.

"October was clearly the free-fall month," said David Blitzer, chair of the index committee at Standard & Poor's. "Everything was going against us in October."

Home prices have fallen every month since January 2007, their slide accelerating as troubles in the housing market infected the broader economy and brought down financial firms. Prices are falling at their fastest pace on record, a sign the U.S. housing market is a long way from recovery.

"It is unlikely that we are anywhere near a bottom in nationwide home prices," Joshua Shapiro, chief U.S. economist at research firm MFR, wrote in a note.

The 10-city index dropped 19.1 per cent in October, its largest decline in its 21-year history, and the new numbers show the cities that hosted the greatest excesses of the housing boom are suffering the deepest drops.

Prices in Las Vegas and Phoenix, Ariz., where developers built subdivisions stretching into the desert, fell by nearly a third in October. Home prices fell 31 per cent in San Francisco and 29 per cent in Miami. Prices in New York declined 7.5 per cent in October over the same month a year ago.

Fourteen of the 20 cities in the Case-Shiller survey posted double-digit declines for the year.

The relative winner was Dallas, which had the smallest yearly decline of 3 per cent. The value of a single-family house in Detroit, which has been pummelled by closing plants and the implosion of the auto industry, was less in October than it was in October 1998.

The Case-Shiller numbers were the latest round of bleak news for the U.S. housing sector, which is at the centre of the country's broader economic troubles. Foreclosures, bad loans and collapsing housing prices contributed to the financial crisis earlier this year, and now the widening recession is dragging housing down even more.

Last week, the U.S. National Association of Realtors reported that previously owned homes, which dominate the market, suffered their sharpest drop in more than 40 years. Home values tumbled 13 per cent in November from a year earlier, the industry group reported.

Housing is likely to deteriorate further in 2009 as the jobs picture continues to weaken. The U.S. unemployment rate is now at 6.7 per cent, its highest point in a decade, and economists predict it will rise to 8 or 10 per cent next year.

"People who think they're going to lose their job don't buy a home," said Steven Ricchiuto, chief economist at Mizuho Securities.

Source: The New York Times

December 31, 2008 in World View [of real estate] | Permalink

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Comments

I think 2009 is going to be worse than 2008. Being the biggest trading partner of US, US recession is going to hit us hard

Posted by: homerevaluation | Jan 11, 2009 2:28:28 PM

If you are going through foreclosure make sure to sign up and erase the bad credit history at http://credit-report-repair.us

Posted by: JR Middlebrook | Jan 2, 2009 6:53:41 PM

Unfortunately Canada is doomed to follow... As a homeowner, I don't like it, but I will probably upscale as prices are dropping.
Happy New Year!

Posted by: Sale Ubiparip | Dec 31, 2008 1:42:55 PM

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