US house prices plumb new depths

House prices in 11 of the biggest US cities have hit new lows, according to the latest data.

The Standard & Poor’s/Case-Shiller index showed a monthly fall in December in all but two of the 20 cities it tracks.

The continued pressure on housing prices has been widely seen by economists as a major drag on economic recovery.

In the once red-hot property market of Las Vegas, home prices fell in December to levels last seen in 1999, burdened by foreclosures and an unemployment rate of 14.5%. Prices in the city have declined for three consecutive months, according to Standard & Poor’s data.

Speculators also built furiously in Phoenix, Arizona, and Miami during the boom and those cities have also been hit hard. The 11 cities that have reached their lowest point since the housing bust in 2006 and 2007 are Atlanta (Georgia), Charlotte (North Carolina), Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (Oregon), Seattle and Tampa (Florida).

Cities hit hard by foreclosures have seen some of the worst falls as people held off purchases hoping for lower prices.

The US national home price index declined 3.9% during the fourth quarter of 2010. It was down 4.1% from the fourth quarter of 2009, the deepest price fall since the third quarter of 2009, when prices were falling at an 8.6% annual rate.

As of December 2010, prices in 18 of the 20 major cities covered by the index were down compared with December 2009. San Diego and Washington DC were the only two cities where home prices showed an annual increase, up 1.7% and 4.1% respectively.

“The national index is within a percentage point of the low it set in the first quarter of 2009. Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David Blitzer, chairman of the index committee at Standard & Poor’s.

“Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country.

” California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco. At the other end is the Sun Belt – Las Vegas, Miami, Phoenix and Tampa. All four made new lows in December.”

Blitzer said he was also seeing renewed weakness in cities including Atlanta, Charlotte, Portland and Seattle, where new lows were also seen.

The news comes as analysts calculated that the property crash may have been worse than first reported. CoreLogic, a real-estate analyst based in California, has questioned the widely watched sales figures compiled by the National Association of Realtors (NAR).

CoreLogic said NAR could have overstated home sales by as much as 20%. NAR reported 4.9m sales of previously owned homes in 2010, down from 5.2m in 2009. But CoreLogic counted 3.3m homes sales last year, down from 3.7m in 2009.

Last year NAR calculated that at the current pace of sales it would take 8.1 months to sell the roughly 3.6m homes it estimated were listed for sale, but the property overhang will take even longer to sort out if sales were lower.

Source: Research note WPB Valuers 


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