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    Reuters
    January 29, 2008

    Home prices in 10 major metropolitan areas fell a record 8.4 percent in the year through November, suggesting the housing slump is worsening, according to a Standard & Poor index released on Tuesday.

    The decline in the S&P/Case-Shiller Home Price Index topped the 6.7 percent annual drop for October and was deeper than predicted by economists at Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. The consensus was for a 7.1 percent fall, Goldman economists said.

    Home prices across big cities have now declined for 11 consecutive months and show little sign of bottoming, said economists, including Robert Shiller, a founder of the index and chief economist at MacroMarkets LLC. The decline in the index accelerated to 2.2 percent in November over October, from 1.4 percent in the previous month, S&P said.

    The index “confirms our outlook that the housing shock is by no means over,” said Michelle Meyer, an economist at Lehman Brothers in New York. “Home prices are falling in response to weak demand, which is a function of buyer sentiment and tight credit conditions.”

    Falling U.S. home prices in the past year have fueled rising delinquencies and foreclosures, with homeowners unable to get out of costly loans. Banks and investors, throttled by losses in risky mortgages, have sharply curtailed financing for all but the most credit-worthy borrowers.

    A surprise cut in the Federal Reserve’s target interest rate last week and another probable one on Wednesday is one ray of hope for the housing market by pulling down most mortgage rates, economists said. The Fed, in cutting its federal funds rate by 0.75 percentage point, cited concerns of deteriorating financial markets and reduced credit for homeowners.

    Rate cuts “could give housing a boost but I’m guessing they won’t be enough to stop a decline” in prices, Shiller said. “The best that we could hope for is a slower pace of declines.”

    A broader but newer index of 20 cities recorded an annual decline of 7.7 percent in November, S&P said. Miami and San Diego led with annual declines of 15.1 percent and 13.4 percent, respectively.

    Other double-digit year-over-year declines were in Las Vegas, Detroit, Phoenix, Tampa and Los Angeles.

    Total declines in U.S. home prices will be at least 15 percent from the peak to the trough, Meyer said. The 10-city composite S&P/Case-Shiller index at 205.09 in November is down 9.4 percent from a high of 226.29 in June 2006.

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    Comment Rules

    3 Responses to “10-city home price drop a record”

    1. jC Says:
      February 6th, 2008 at 5:29 am

      There are always those who thrive when masses are dying of sickness. There are always those who thrive economically when economic decline seems to be the order of your nation. There are always those who are clear-minded, in environments of confusion. You do not need everyone or anyone else to align with your desire—only you need to align with your desire.

    2. Frank Says:
      February 7th, 2008 at 3:04 am

      Underscoring this slump in certain areas is the fact that entire communities in california are now over 90% mexican. As the hispanic population booms, the values of homes in Los Angeles Valley, Hollywood and Downtown Los Angeles will implode. A much lower income bracket of people are becoming the majority in southern california and, as a logical result, the prices of the property will lower to match their ability to pay. Parts of America are becoming third world zones. In Los Angeles, expect the only areas where property values will remain robust to be the west side. Everywhere else is looking increasingly like Mexico. People from all over LA are trying to sell and move closer to the beach before the value of their homes is reduced to pennies on the dollar. Out of control immigration from Mexico is chronically exacerbating economic decline.

    3. Jake Z Says:
      February 7th, 2008 at 6:07 am

      I agree with jC. There were more millionaires made during the depression then any other time in our nations history. To some this is a time of crises, to others, opportunity.