April 29th, 2011 6:14 PM by Lehel S.
The home price gains made after the housing market bottomed in spring 2009 have vanished, with 10 cities posting fresh lows in February, according to a closely watched index that tracks home prices in America's biggest metropolitan areas.
The Standard & Poor's/Case-Shiller index for 20 major U.S. cities, released Tuesday, came within a hair of its previous bottom hit in April 2009. The renewed drop in home prices indicates the nation's housing woes continue despite a recovery in the broader economy.
"There is very little, if any, good news about housing. Prices continue to weaken, while trends in sales and construction are disappointing," said David M. Blitzer, chairman of the index committee at Standard & Poor's.
The Case-Shiller index showed prices dropped 3.3% from February 2010 and 1.1% from January amid weak demand for homes and a strong market presence for cheap foreclosures and other so-called distressed properties.
Other than Washington, all of the major cities tracked by the index posted a year-over-year decline. Los Angeles was down 2.1%, San Diego fell 1.8% and San Francisco dropped 3.5%.
When left unadjusted for seasonal variations, nearly every city declined, with Los Angeles down 1%, San Diego down 1.3% and San Francisco falling 2.6%. Detroit was the only city that saw a gain, up 1%.
Foreclosures remain a significant part of the market and probably will remain so for the foreseeable future as borrowers continue to fall behind on their mortgage payments.
Patrick Newport, U.S. economist for consultancy IHS Global Insight, wrote in a note Tuesday that the decline in the index and drops in other home price measures — specifically a monthly index produced by the Federal Housing Finance Agency, which has seen steady declines in recent months — indicate that the housing slump is once again widespread.
The federal agency's index's "recent decline indicates that the vicious cycle in which falling prices lead to more foreclosures which lead to even lower housing prices, continues to play a role in keeping housing on the mat," Newport wrote.
The Case-Shiller index has fallen to nearly the same level it was in April 2009, the last time it bottomed, evaporating the gains made last year after a popular tax credit for buyers fueled sales nationally. Experts predict prices will continue to fall this year, pushing past their previous lows into a much-feared double dip.
Ten major cities posted fresh lows. Those cities were Atlanta; Chicago; Las Vegas; Miami; New York; Phoenix; Seattle; Charlotte, N.C.; Portland, Ore.; and Tampa, Fla.
Atlanta, Cleveland and Las Vegas joined Detroit as cities with home prices below their 2000 levels in February. Phoenix is barely above its January 2000 level.
The Case-Shiller index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time. From those data, an index score is used to show price changes.