Home prices in big cities decline for 2nd month

12/28/2011

WASHINGTON — U.S. home prices declined in most major cities for the second straight month, according to the Standard & Poor’s/Case-Shiller index released Tuesday.

It showed prices dropped in October from September in 19 of the 20 cities tracked.

The decline reflects the typical fall slowdown after the peak buying season.

Prices had risen modestly in April through August in at least half the cities tracked.

Still, home prices have fallen roughly 32 percent nationwide since the housing bubble burst five years ago and are back to 2003 levels, according to the index.

Prices are even lower in hard-hit areas such as Atlanta, Cleveland, Detroit, Phoenix, and Las Vegas.

Washington, New York, Los Angeles, and San Diego have experienced the smallest declines.

The Case-Shiller index measures prices for roughly half of all U.S. homes.

Prices are compared with those in January, 2000, and the index is based on a three-month moving average.

The monthly data are not seasonally adjusted.

Atlanta, Detroit, and Minneapolis posted the biggest monthly declines. Prices in Atlanta and Las Vegas fell to their lowest since the housing crisis began. Prices rose in Phoenix after three straight monthly declines.

David Blitzer, chairman of S&P’s index committee, said steep price drops in cities such as Atlanta, Chicago, Cleveland, Detroit, and Minneapolis were particularly worrisome because their gains earlier this season were so strong.

“Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness,” Mr. Blitzer said. “These markets were some of the strongest during the spring-summer buying season.”

Many Americans are reluctant to purchase a home more than two years after the recession officially ended.

High unemployment and weak job growth have deterred many would-be buyers. Even the lowest mortgage rates in history haven’t been enough to lift sales.

Some people can’t qualify for loans or meet higher down payment requirements.

Many with good credit and stable jobs are holding off because they fear that prices will keep falling.

Home values remain depressed despite some modest progress in the housing market.

Residential construction is likely to add to U.S. economic growth in 2011, the first time that has happened in four years.

That’s mainly because apartments are being built almost twice as fast as two years ago — reflecting a surge in people who want to rent rather than buy homes.