LOS ANGELES – Home prices in the nation’s largest metropolitan regions continued their descent in December.
The widely followed Standard & Poor’s/Case-Shiller Index, which tracks the real estate market in 20 major U.S. cities, showed that prices dropped 2.4 percent in December from the same month a year earlier, the third consecutive year-over-year decline.
The index fell 1 percent in December from November, marking the fifth consecutive monthly decline.
“Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David M. Blitzer, chairman of Standard & Poor’s index committee.
Eleven cities posted new lows since home prices peaked in 2006 and 2007.
Those cities were Atlanta; Charlotte, N.C.; Chicago; Detroit; Las Vegas; Miami; New York; Phoenix; Portland; Seattle; and Tampa, Fla. Nine of those cities had posted lows with November’s report as well – New York and Phoenix are the new members of this group.
On a month-over-month basis, only Washington eked out a gain, up 0.3 percent.
Standard & Poor’s also released its U.S. National Home Price Index, which is a broader measure of national home prices released quarterly. That index fell 3.9 percent in the fourth quarter of 2010 compared with the prior quarter, and 4.1 percent from the fourth quarter 2009.
In a conference call with reporters Tuesday morning, Robert Shiller, co-creator of the index and a professor at Yale University, said a home price drop in “real” terms, meaning adjusted for inflation, of 15 percent to 25 percent, was possible.
Karl Case, a professor at Wellesley College, said a big drop was conceivable, but also argued that a quick turnaround could occur, depending on how confident consumers were about a recovery.
“It is possible the mood could change, and the mood could change very quickly,” Case said.
In a research note, Paul Dales, senior U.S. economist with Capital Economics, predicted that low mortgage rates, and the new supply of highly affordable housing stock, will not prevent prices from falling lower this year.
“The second downward leg in house prices that began last year will continue throughout this year and take prices to a new cycle low, some 5 percent below current levels,” Dales said. “If a vicious circle of falling prices and rising foreclosures were to develop, prices would fall much further.”