Originally published December 30, 2008 at 8:34 AM | Page modified December 30, 2008 at 8:35 AM
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U.S. home prices post 18% annual drop in October; Seattle down 10.2%
U. S. home prices dropped by the sharpest annual rate on record in October and there are no signs the housing pain is over, according to a closely watched index released Tuesday.
The Associated Press
NEW YORK — U.S. home prices dropped by the sharpest annual rate on record in October and there are no signs the housing pain is over, according to a closely watched index released Tuesday.
The Standard & Poor's/Case-Shiller 20-city housing index fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.
Both indexes have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.
None of the 20 cities in the Case-Shiller index saw annual price gains in October — for the seventh consecutive month — and 14 of them posted record year-over-year declines.
Three metro areas clocked in annual declines of more than 30 percent. Phoenix home values lost almost 33 percent, while Las Vegas prices fell nearly 32 percent. San Francisco prices tumbled 31 percent year-over-year in October.
Atlanta (down 10.5 percent), Seattle (down 10.2 percent) and Portland, Ore. (down 10.1 percent), all recorded their first double-digit annual declines in October.
Of course, that month was one of the worst in history for U.S. stock markets, and President Bush was forced to sign a $700 billion bailout plan to help quell the global financial panic.
Since then, the Federal Reserve has slashed interest rates and helped drive down mortgage rates to historic lows.
While not yet experiencing as severe a contraction as in the Sunbelt, it seems the Pacific Northwest and mid-Atlantic South is not immune to the overall demise in the housing market," said David Blitzer, chairman of the Index Committee at Standard & Poor's.
Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.
"The numbers are getting worse. And I think they will get quite a bit worse over the next two months because housing demand has plunged since the market went into turmoil," said Patrick Newport, an economist at IHS Global Insight.
Underscoring that point, other figures released Tuesday showed consumer confidence hit an all-time low in December, dropping unexpectedly in the face of layoffs and deteriorating markets for housing, stocks and other investments.
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At the same time, the Present Situation index, which measures how respondents feel about business conditions and employment prospects, has declined close to levels last seen after the 1990 to 1991 recession.
So many would-be homebuyers are sitting firmly on the fence.
On Wednesday, Freddie Mac is set to release its weekly survey of mortgage rates, and the Mortgage Bankers Association will release its weekly survey of mortgage applications.
So far, favorable mortgage rates have sparked a mini-refinancing boom, but the for-sale market has yet to see much of a boost. Buyers are nervous about getting into the market when home values are sliding and unemployment is rising.
Last week, the government reported that sales of new homes fell in November to the slowest pace in almost 18 years, while new home prices dropped 11.5 percent to $220,400, the largest decline in eight months.
Sales of existing homes also fell in November, with the median sales price plunging a record 13.2 percent to $181,300, the National Association of Realtors reported last week.
The Associated Press reporter Ellen Simon and Seattle Times desk editor Bill Kossen contributed to this report.
Copyright © 2008 The Seattle Times Company
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