Home prices down for 6th straight month

Tuesday, December 27, 2011   /   by Justin Hoffmann

Home prices down for 6th straight month

Housing markets, which had seemed to be slowly gathering strength earlier this year, fell for the sixth straight month in October, down 1.2% compared with September and 3.4% year-over-year.

The home price decline recorded by the S&P/Case-Shiller 20-city home price index ran counter to other recent industry reports that indicated some housing market improvement.

New home sales, existing home sales and home building have all recorded increases lately and mortgage interest rates are at record lows, giving homebuying an added boost.

"Some of the other housing statistics posted relatively healthy figures for November, but it seems that most of the good news was confined to the multi-family sector," said David Blitzer, spokesman for S&P.

The 20-city index, adjusted for seasonal differences, has dropped every month since April and is off 1.9% over that period. Since the housing bust began in mid-2006, homes have lost nearly 33% of their value.

Peter Morici, a professor of economics at the University of Maryland, said home prices remain weak because demand for existing homes is soft. Many potential buyers are migrating to rental markets or buying new homes that had sat unsold for months.

According to Morici, the current home price levels represent a correction from inflated prices reached during the bubble.

"Prices are where they belong and that's where they'll stay," he said.

Nineteen of the 20 cities posted declines in October, with Phoenix the only exception. Prices went up there 0.3% compared with September.

Midwest markets and the Atlanta metro area fared badly, with Atlanta prices down 5% in October following a 5.9% plunge in September.

By Les Christie

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