U.S. home prices up, but they slip here

Home prices may be rebounding in much of the rest of the country, but the bounce hasn't hit Seattle yet.

The Standard & Poor's/Case-Shiller home-price index of 20 major cities climbed 1 percent from July to August on a seasonally adjusted basis.

But the Seattle market was one of just four where the index declined, slipping 0.2 percent to its lowest level since April 2005.

The index, released Tuesday, showed a widespread turnaround in much of the rest of the country, with prices rising for at least the third straight month in 15 metro areas. San Francisco, Minneapolis and San Diego led the way.

For the 20 cities overall, prices were down 11.4 percent from a year ago. In the Seattle market, which covers King, Snohomish and Pierce counties, the year-over-year drop was 14.7 percent.

Home prices in Seattle didn't start declining until July 2007, more than a year after the downturn began nationally.

George Rolfe, director of the Runstad Center for Real Estate Studies at the University of Washington, said prices here probably have hit bottom and should start to climb again by early next year.

"For reasons I don't entirely understand, Seattle has lagged the nation in real-estate upturns and downturns for the last three or four (cycles) by six months to a year," he said.

The local real-estate market still is digesting Washington Mutual's collapse a year ago, Rolfe said: "Our psychological trough hit later."

But Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said several factors work against a turnaround in Seattle home prices.

Foreclosures, which depress prices, are on the upswing, he said. And while sales are up overall, higher-priced homes still aren't selling.

"I'm certainly not willing to forecast a rebound of any consequence," Crellin said.

Only five of the 20 cities in the index have experienced steeper home-price declines since last August, he said, "and they're company we don't want to keep:" Las Vegas, Phoenix, Detroit, Miami and Tampa.

Las Vegas and Charlotte, N.C., joined Seattle in hitting new lows on the index in August. Home prices also declined in Cleveland from the previous month.

Prices in Las Vegas have plunged by 56 percent since peaking in April 2006, the largest peak-to-trough decline of all 20 cities.

In Seattle, prices have dropped 22.5 percent.

Despite the August uptick in the index in most cities, prices nationally still have fallen almost 30 percent from the peak in May 2006.

Despite signs the economy is recovering, home prices could decline again as unemployment and foreclosures rise and a tax credit for first-time homebuyers expires next month.

Zach Pandl, an economist at Nomura Global Economics, expects prices to fall to the lows reached earlier this year before recovering in early 2010.

"We need to see flat to rising prices in the winter months," Pandl said. "That would be a very encouraging sign that prices have bottomed out."

Congress is considering extending the tax credit that saves first-time buyers 10 percent of the sales price, up to $8,000. This week, top Democrats in the Senate pressed a plan that would prolong the credit but gradually phase it out over the next year.

Supporters will likely point to new data Tuesday that showed confidence about the U.S. economy declined unexpectedly this month. With job prospects bleak, the Conference Board's Consumer Confidence Index fell almost 6 points from September to the lowest level since May.

Seattle Times

business reporter Eric Pryne

and The Associated Press contributed to this report.