Home prices in 20 U.S. metropolitan areas fell in January by the most on record, a sign the housing recession is deepening, a private survey showed today.
The S&P/Case-Shiller home-price index dropped 10.7 percent from January 2007, after a 9 percent decrease in December. The gauge has fallen for 13 consecutive months.
Price declines will continue as foreclosures add to a glut of unsold properties, and stricter lending rules make it harder to get financing. Declining values leave homeowners feeling less wealthy and with less home equity to borrow against, undermining consumer spending and pushing the economy closer to a recession.
“As long as inventories are high, home prices will fall,” Michelle Meyer, economist at Lehman Brothers Holdings Inc. in New York, said before the report. “Foreclosures will add to inventories and crowd out regular sales, further depressing home prices.”
The home price index was forecast to decline 10.5 percent, according to the median estimate of 18 economists surveyed by Bloomberg News. Projections ranged from declines of 9.5 percent to 11 percent.
January home prices fell 2.4 percent from a month earlier, following a 2.1 percent decline the prior month, the Case- Shiller report showed. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month to month.
Prices of existing single-family homes slumped in January, with 16 of the 20 regions measured posting record annual declines, according to the Standard & Poor’s/Case Shiller national home price index reported on Tuesday.
The composite month-over-month index of 20 metropolitan areas fell 2.4 percent to 180.65 in January from December, bringing the measure down 10.7 percent from a year earlier.
S&P said its composite month-over-month index of 10 metropolitan areas declined 2.3 percent in January to 196.06, for an 11.4 percent year-over-year drop.