Falling home prices stir fears of a new bottom

Associated Press May. 26, 2010 12:00 AM

NEW YORK - The housing slump isn't over.

Tax credits and historically low mortgage rates have failed to lift home prices so far this year. Prices nationally fell 0.5 percent in March from February, according to the Standard & Poor's/Case-Shiller 20-city index released Tuesday.

That marks six straight months of declines - a sign that the housing market is going in reverse.

"It looks a little like a double-dip already," economist Robert Shiller said in an interview. "There is a very real possibility of some more decline."

Home prices in Phoenix, one of the 20 indexed cities, mirrored the national trend with a 0.5 percent monthly decrease. In terms of ranking from most improved to biggest decline, Phoenix was in the middle at No. 10.

The co-creator of the Case-Shiller index, who predicted in 2005 that the housing bubble would burst, says he worries that home prices rose last year only because of the federal tax credits.

That fear is shared by other economists.

They note that weak job growth, tight credit and millions more foreclosures ahead will weigh on the home market.

All that is discouraging for homeowners who have seen the value of their largest asset
deteriorate sharply over the past three years. Falling home prices tend to curtail consumer spending. And they make it harder for struggling borrowers to refinance into an affordable home loan.

Prices in 13 of the 20 cities tracked by the index fell. Only six metro areas recorded price gains. One, Boston, came in flat.

In the first quarter of 2010, U.S. home prices fell 3.2 percent compared with the fourth quarter.

The numbers are especially disturbing because they show that improved sales due to the tax credits didn't translate into higher prices, said David M. Blitzer, chairman of the S&P index committee.


Falling home prices stir fears of a new bottom