Home prices continued to slump in November, sliding 19.1% on an annual basis in 10 major metropolitan areas tracked by the S&P/Case-Shiller 10-city composite home price index. The data released this morning also showed erosion in Case-Shiller’s 20-city index, where prices declined by 18.2% annually, a new record.
In the words of David Blitzer, chairman of Standard & Poor’s Index Committee, it was a “freefall in residential real estate.”
Case-Shiller’s 10-city composite includes Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C. The branded 20-city composite index measures those same 10 metros, plus Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix; Portland, Ore.; Seattle, and Tampa.
As usual, the worst performers among the cities tracked proved to be Phoenix (down 32.9%) and Las Vegas (down 31.6%), where the housing boom has turned into an economic bust. With an annual home price decline of 30.8%, San Francisco took third place on this monthly list of struggling housing markets.
As noted by Patrick Newport, U.S. economist for IHS Global Insight, “the main force driving house prices down are foreclosures, which are still rising. The Obama administration and the [Federal Reserve] are working on ways to limit the number of ‘preventable foreclosures.’ Unfortunately, trial and error will be part of this process. Last month, the Office of the Comptroller of the Currency and the Office of Thrift Supervision jointly issued a report showing that loan modification strategies are failing. Of the 73,000 loans modified in the first quarter that these agencies tracked, about 25% of modified loans were delinquent after one month, and 60% were delinquent after eight months. Loans modified in the second quarter were souring at an even higher rate,” Newport said. “Making matters worse, the report could not pinpoint why re-default rates were so high.”
Alison Rice is senior editor, online, at BUILDER magazine.