Housing Prices in 20 U.S. Cities Fall a Record 18.5%
Feb. 24 (Bloomberg)– Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank.
The S&P/Case-Shiller index’s decrease exceeded forecasts and compares with an 18.2 percent rate of decline in November. The gauge has slid since January 2007, and year-over-year records began in 2001. The Federal Housing Finance Board said separately prices in 2008 fell a record 8.2 percent.
Record foreclosures are contributing to declining property values and household wealth, crippling the consumer spending that makes up about 70 percent of the economy. The Obama administration has pledged to spend $275 billion to help stabilize the housing market, including $75 billion to bring down mortgage rates and encourage loan modifications.
“The massive inventory overhang in the market and the surge in foreclosures mean prices will continue to fall rapidly,” Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said today in a note to clients. “The administration’s rescue plan will, in time, slow the rate of decline, but it won’t happen immediately.”
Economists forecast the 20-city index would fall 18.3 percent from a year earlier, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 19 percent.
