Posted on Tuesday, January 4, 2011
Home prices dropped more than forecast in October — including a decline of 3.4 percent in the Miami area — a sign housing will remain a weak link as the U.S. recovery accelerates into the new year.
The S&P/Case-Shiller index of property values fell 0.8 percent from October 2009, the biggest year-over-year decline since December 2009, the group said Tuesday.
A wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011, representing a risk to household finances. Federal Reserve policy makers this month said "depressed" housing and high unemployment remained constraints on consumer spending, reasons why they reiterated a plan to expand record monetary stimulus.
"We’ll remain in negative territory for several more months," said Dean Maki, chief U.S. economist at Barclays Capital in New York. "The housing market does remain weak and none of the recent data suggest a substantial pickup."
The S&P/Case-Shiller figures track the most recent data from Florida Realtors. The state trade group said on Dec. 22 that year-over year prices of single-family homes declined 7 percent in Miami and 8 percent in Palm Beach County. Broward County prices bucked the trend, rising 9 percent compared with a year earlier.
The national gauge fell 1 percent in October from the prior month after adjusting for seasonal variations, matching September’s drop which was larger than previously estimated. Unadjusted prices decreased 1.3 percent from the prior month.
Eighteen of 20 cities showed a decrease in prices in October, led by a 2.1 percent drop in Atlanta, and decreases of 1.8 percent in Chicago and Minneapolis. Denver and Washington were the only two that posted gains.
Six markets, including Atlanta, Charlotte, Miami, Seattle, Tampa and Portland, Oregon, reached their lowest levels in October since prices started to retreat.
"The double-dip is almost here," said David Blitzer, chairman of the index committee at S&P. Sales aren’t "giving any sense of optimism."
The 20-city index was down 30 percent in October from its July 2006 peak.
The Case-Shiller gauge is based on a three-month average, which means the October data was influenced by transactions in September and August.
The drop in prices represents a setback for housing after values recovered earlier this year, thanks to an $8,000 homebuyers’ tax credit that lifted purchases.
Reports earlier this month showed the housing market is stuck near recession levels even as the broader economy is recovering. Housing permits fell in November to the third-lowest level on record, while starts rose for the first time in three months, the Commerce Department reported Dec. 16.
Sales of new and existing homes last month rose less than projected by the median forecast of economists surveyed by Bloomberg, reports from the Commerce Department and the National Association of Realtors showed last week.
Daily Business Review
Review staff and wire