In 17 out of 20 major American cities, home prices in September were lower than in August, the latest S&P/Case-Shiller home price index shows.
It’s the first drop after five straight months in which at least half the cities in the survey showed monthly increases, The Associated Press reported. Prices rose month-over-month only in Washington, DC, New York and Portland, the survey said, according to CNN.
The survey, released today, showed that home prices for the three months ending Sept. 30 were 3.9 percent lower than the same period in 2010, with Atlanta, Las Vegas and Phoenix posting record index lows, CNN reported. Prices rose year-over-year only in Detroit, where prices were up 3.7 percent and Washington, DC, where prices increased by 1 percent.
Home prices are now at 2003 levels and almost one-third lower than the index’s peak in July 2006, Bloomberg Businessweek reported.
“Despite record high affordability of real estate, the psychology of home buyers is still being weighed down by economic uncertainty, keeping them on the fence when it comes to buying homes,” Stan Humphries, chief economist at Zillow.com, which measures home values, told the AP. Others can’t qualify for loans or save enough for higher down payments, the AP reported.
According to the AP:
Prices are certain to fall further once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation into mortgage lending practices.
Economist Karl Case, co-founder of the Case-Shiller index, said US home prices won’t improve until the economy gets stronger, according to Bloomberg Businessweek. “Normally, the way we’ve cleared the market is we’ve had more household formation,” Case said in an interview today with Tom Keene and Ken Prewitt on Bloomberg Radio. In this economy, Case said, people are moving in with friends or family rather than establishing households of their own; thus, “demand is not going anywhere.”