Home prices across the U.S. fell in December to the lowest level since mid-2006, when the subprime mortgage crisis began, according to the S&P/Case-Shiller Home Price Indices released Tuesday.
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Home prices across the U.S. fell in December to the lowest level since mid-2006, when the subprime mortgage crisis began, according to the S&P/Case-Shiller Home Price Indices released Tuesday.
The national composite fell by 3.8 percent during the fourth quarter of 2011 and was down 4.0 percent compared with the fourth quarter of 2010. Both the 10- and 20-city composites fell by 1.1 percent in December over November, and they posted annual returns of -3.9 percent and -4.0 percent versus December 2010, respectively. All indices performed worse than economists expected.
"In terms of prices, the housing market ended 2011 on a very disappointing note," said David Blitzer, chairman of the Index Committee at S&P. "With this month's report we saw all three composite hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended."
Foreclosed properties are hampering the housing industry's recovery. "Distressed properties returning to the market mean prices will stay depressed, prompting buyers to wait for cheaper bargains and impeding construction. While sales have begun to stabilize, a rebound in home values may take time, underscoring Federal Reserve policy makers' concern that weakness in housing is blunting their efforts to spur the economic expansion," wrote Business Week.
In general, most of metropolitan regions posted weak data in December. Atlanta, Las Vegas, Seattle and Tampa Bay each saw average home prices hit new lows, and 17 of the cities S&P monitors have seen monthly declines for at least three consecutive months.
"The pick-up in the economy has simply not been strong enough to keep home prices stabilized," Blitzer said. "If anything it looks like we might have reentered a period of decline as we begin 2012."