US home prices fall 14%

Home prices in 20 US metropolitan areas fell in March by the most on record, pointing to continued weakness in the housing market that will further drag on the economy.

The S&P/Case-Shiller home-price index dropped 14.4 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.

Prices continue to slide as record foreclosures put more homes on the market and stricter lending standards make it harder to get loans. Falling home values are slowing consumer spending, threatening to halt the six-year expansion.

"Many households are putting their home-buying plans on hold, given the expectations that the house price corrections will persist," Celia Chen, an economist at Moody's Economy.com in West Chester, Pennsylvania, said before the report. "The housing downturn remains in full swing."

Prices dropped 2.2 percent in March from a month earlier, after a 2.6 percent decline in February, the report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to-month variations.

The index was forecast to drop 14 percent following a 12.7 percent drop in February, according to the median estimate of 9 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.9 percent to 15.1 percent.

10-city index

The group's 10-city composite index, with a history back to 1987, fell 15.3 percent in the 12 months ended in March, also the most ever.

Nineteen of the 20 cities in the index showed a year-over-year decrease in prices for March, led by a 26 percent slump in Las Vegas and a 25 percent decline in Miami. Charlotte was the only area showing a gain with a 0.8 percent increase.

Compared with February, homes in 18 of 20 areas covered dropped in value.

Prices remained under pressure in April, a report last week showed. The median price of existing homes sold last month fell 8 percent from April 2007, the National Association of Realtors said. Existing home sales fell 1 percent and were 33 percent below their peak in September 2005. The number of unsold homes rose to its second-highest level on record.

Most economists and investors say housing prices have further to fall after more than doubling in the early part of the decade to a peak in 2006.

"The decline in housing prices is still accelerating and is going to overshoot on the downside the same way it overshot on the upside," billionaire investor George Soros told a conference at the London School of Economics last week. "We are not yet halfway in the decline in housing prices."

Agencies

(China Daily 05/28/2008 page17)