December 29th, 2010 8:16 AM by Lehel S.
A closely watched index of home prices in 20 major metropolitan areas fell in October, underscoring a renewed decline for the U.S. housing market.
Prices of previously owned single-family homes fell 0.8% in October over the same time last year, according to the Standard & Poor's / Case-Shiller index of 20 metropolitan areas.
That was worse than most economists had expected, according to Bloomberg News, and the largest year-over-year decline since December 2009.
"The double-dip is almost here, as six cities set new lows for the period since the 2006 peaks," saidDavid M. Blitzer, chairman of the index committee at Standard & Poor's. "There is no good news in October's report. Home prices across the country continue to fall."
Home sales and housing starts were weak in November, portending further declines when data for that month are reported. "Neither is giving any sense of optimism," Blitzer said.
Only four cities -– Los Angeles, San Diego, San Francisco and Washington -– showed any year-over-year gains.
[Updated 9:31 a.m. PST] “California is the only state in the union that is up year-over-year, and it has had a pretty good bounce on the coasts,” said Karl E. Case, a Wellesley College professor and co-creator of the index. “I still remain cautiously optimistic about California -- it could be the engine that gets the train going.”
Six markets -– Atlanta; Charlotte, N.C.; Miami; Portland, Ore.; Seattle and Tampa, Fla. -– hit their lowest levels since home prices started to fall in 2006 and 2007. That means that average home prices in those metro areas have fallen below the worst of the declines seen during the financial crisis in the spring of 2009.
On a nonseasonally adjusted basis, every major metro area declined month-over-month, and the 20-city index was down 1.3%. The seasonally adjusted index painted a similar picture, falling slightly less, down 1%, with only Washington, D.C., and Denver eking out gains of 0.1% and 0.3%, respectively.
Patrick Newport, U.S. economist for research firm IHS Global Insight, said that the bulk of the drop was related to the expiration of the federal tax credit for buyers in April. The October data include sales from August, September and October and so captured the fallout from the expiration of the popular credits, which fueled buying during the first half of 2010.
“Although prices are falling again in all 20 cities, they are not in a freefall, as they were in 2007 and 2008,” Newport said. “During these years, prices collapsed as the housing bubble burst. The recent drop is mostly related to the second tax credit.”