U.S. home prices were largely flat in August from a month earlier and down almost 4% from a year ago, with more declines ahead, economists say.
The Standard & Poor's Case-Shiller home price data, released Tuesday, showed non-seasonally adjusted prices dipping in 10 of 20 major metropolitan areas in August from July.
Yet there was a "modest glimmer of hope" in that year-over-year results in 16 of 20 cities were better than they had been in recent months, says David Blitzer, chairman of the S&P index committee.
Case-Shiller's 20-city index showed prices down 3.8% in August from a year ago, while the 10-city index posted a 3.5% decline. August prices were flat with July in the 20-city index when adjusted for seasonal factors and down 0.2% when not adjusted.
The market is battling high unemployment, rampant foreclosures in some areas, weak consumer confidence and tight lending standards.
Prices will fall another 5% to 10%, says IHS Global Insight economist Patrick Newport. They'll fall even more if the U.S. economy falls into recession, he says.
Consumers clearly are distraught. Consumer confidence plunged in October to its lowest level since March 2009, the Conference Board, a private research group, said Tuesday.
The tremendous volatility in equity markets, and the European debt issue, are driving concerns, IHS says.
In addition, consumers are concerned about business conditions, the job market and income prospects, says Lynn Franco, director of the Conference Board Consumer Research Center. That will be a drag on home prices, says Jed Kolko, economist for real estate website Trulia.
The latest housing price report from the Federal Housing Finance Agency, also released Tuesday, points to a weaker housing market than previously thought, says Paul Ashworth, economist for Capital Economics.
The FHFA index -- which measures sales prices of homes owned or guaranteed by Freddie Mac and Fannie Mae-- shows prices slipping 0.1% in August, for their first monthly decline since March.
Some regions are performing better than others.
Chicago, Detroit and Minneapolis all posted monthly home price increases going back to May, the Case-Shiller data show.
The markets were some of the weakest, particularly Detroit. But as of August, home prices in Detroit were up 2.7% from a year earlier -- the most of any city measured by Case-Shiller.
Detroit is rising faster than others because it fell so far, Kolko says. But home prices in Washington, D.C., Chicago, Minneapolis and Boston were also up slightly in August from May -- even when adjusted for seasonal factors, Kolko says.
Those cities tend to have stronger economies, lower housing vacancy rates or both, he adds.
Year-over-year, only Washington, D.C., joined Detroit in posting higher prices. Prices were up 0.3% in Washington in August vs. a year ago, according to Case-Shiller.
by Julie Schmit USA Today Oct. 27, 2011 12:06 PM
Economists warn housing prices will lose more ground
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