Home prices decline in November [Updated]
The latest read on home prices, released Tuesday morning, shows fresh declines in the vast majority of the nation’s largest metropolitan areas. According to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas, prices of previously owned single-family homes fell 1.6% in November from the same time last year. The closely watched index fell 1% from October to November.
[Updated at 8:54 a.m.: Eight cities -– Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Seattle and Tampa –- hit their lowest levels since home prices peaked in 2006 and 2007. That means that average home prices in those areas have fallen even further than during the worst of the financial crisis during the spring of 2009.
"The falls in house prices seen towards the end of last year are likely to continue throughout this year," Paul Dales, U.S. economist for Capital Economics, said. "We think that prices will fall by just over 5% in 2011, leaving them a little less than 5% below the previous cycle low. That will send more homeowners into negative equity and constrain consumption growth."
The coastal cities of California and the nation's capital were the only apparent bright spots in November's report. In November, only four metro areas -- Los Angeles, San Diego, San Francisco and Washington, D.C. -- showed year-over-year gains. Every city declined from October to November besides San Diego, which eked out a 0.1% gain.
The performance of the California cities in the index doesn't reflect the state's hardest hit markets in the Inland Empire and Central Valley. Other recent home-price measures show the Golden State’s real estate market eroding. The Case-Shiller index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable read on home prices.]
[Updated at 11:22 a.m.: Standard & Poor's has issued a correction, adding Chicago to the list of cities where home prices reached their lowest levels since the 2006-07 peak.]
The index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time.
Adjusted for seasonal factors, the index painted a similar picture, falling slightly less, down 0.5%. Standard & Poor's has warned that such an adjustment lately has distorted the index because of the glut of foreclosures.
-- Alejandro Lazo
Photo: A for sale sign in Pepper Pike, Ohio. Credit: Amy Sancetta / Associated Press