Residential real estate prices dropped more than forecast in the year ended October, showing a broad-based decline that indicates the housing market continues to be weighed down by foreclosures.
The S&P/Case-Shiller index of property values in 20 cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said today. The median forecast of 27 economists in a Bloomberg News survey projected a 3.2 percent decrease.
The real-estate market is bracing for another wave of foreclosures that may keep pressure on home prices, indicating any housing recovery will take time to develop. Nonetheless, rising builder confidence, a pickup in construction and fewer unsold new properties for sale are among signs the industry that triggered the last recession is steadying.
“Home prices at the national level clearly remain depressed, dragged down by areas of the country that remain weighted down by a large inventory of foreclosed properties,” Peter Newland, a U.S. economist at Barclays Capital Inc. in New York, said before the report. “However, other areas are beginning to see stabilization and some price gains.”
Estimates in the Bloomberg survey for the price change ranged from declines of 2.4 percent to 3.6 percent. The Case- Shiller index is based on a three-month average, which means the October data were influenced by transactions in August and September.
U.S. home prices fell in most major cities for the second straight month, further evidence that the housing recovery will be bumpy.
The Standard & Poor’s/Case-Shiller index shows prices dropped in October from September in 19 of the 20 cities tracked. Prices in a majority of cities declined for the second straight month. Prior to that, they had risen for five consecutive months in at least half of the cities tracked.
Atlanta, Detroit and Minneapolis posted the biggest monthly declines.
Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began. Prices rose in Phoenix after three straight monthly declines.