Residential real-estate prices dropped in the 12 months to February by the most in more than a year, putting the market on the verge of eclipsing the nadir reached during the U.S. recession.
The S&P/Case-Shiller index of property values in 20 cities fell 3.3 percent from February 2010, the biggest year-over-year decline since November 2009, the group said today in New York. At 139.27, the gauge was just shy of the six-year low of 139.26 in April 2009, two months before the economic slump ended.
Values will probably keep falling as foreclosures swell the supply of unsold homes, which means the construction industry will take time to recover. Another report showed consumer confidence climbed more than forecast this month, making it more likely that spending will keep growing as the economic expansion creates jobs and stock prices advance.
“Housing will continue to lag the recovery until foreclosures abate,” said Sal Guatieri, a senior economist at BMO Capital Markets Inc. in Toronto. At the same time, “the negative wealth effect from home price declines seems to be more than offset by stock market gains,” and “the economy is moving in the right direction.”
From the WSJ:
A closely watched gauge of home prices fell in February for the eighth month in a row, as the real-estate market continued to sink toward a low hit during the recession.
The S&P/Case-Shiller 10-city and 20-city indexes both fell 1.1% in February from a month earlier, not adjusted for seasonality. Prices in the index following 10 major metropolitan areas were down 2.6% from a year ago, while the 20-city index was 3.3% below the level recorded in February 2010.
Home prices are now only slightly above the recession low hit in April 2009. With the price for new and occupied homes still burdened by foreclosures going for cut-rate prices and a large stock of other unsold homes, many economists expect prices to continue falling, if at a slower rate, through much of 2011.
Year-over-year prices were up in only one market: Washington, D.C. Meanwhile, 10 markets including Atlanta, Chicago and Seattle hit their lowest point of the recession and post-recession period.
“There is very little, if any, good news about housing,” said David M. Blitzer, chairman of S&P’s index committee.