Home prices were down 3.4% in October from the same time last year, according to the Standard & Poor’s Case-Shiller home price index of 20 leading U.S. cities, which was released Tuesday. (View Austin Texas real estate market statistics.)
Prices were also down from September, on a non-seasonally adjusted basis, in 19 of the 20 cities the index covers.
The poor showing stands in contrast to several months earlier this spring and summer when prices showed signs of rising or stabilizing.
Those increases probably resulted from a foreclosure slowdown following revelations last fall that paperwork and processes weren’t always completed properly, says Patrick Newport, economist with IHS Global Insight.
Now, mortgage companies are stepping up foreclosure activity and that’s driving prices lower, Newport says.
Also Tuesday, the Conference Board, a private research group, said consumer confidence jumped in December to its highest level since April.
But with home prices falling for much of the past year — and expectations of further price declines ahead — many home-buyers are sitting on the sidelines, says David Blitzer, chairman of the S&P index committee. “It’s hard to convince yourself that you’ve got to buy a house right now,” Blitzer says.
A Zillow survey of 109 top housing experts released last week indicates that U.S. home prices will decline until late next year or early 2013.
Several factors will hamper home prices , economists say, including:
- Negative equity. About 22% of homeowners with a mortgage owe more on their homes than they are worth. Those people are not likely to move and buy another home, says Christopher Thornberg of Beacon Economics.
- Foreclosures. Nationwide, more than 6 million homeowners were late on their home mortgage payment or were already in foreclosure at the end of the third quarter. As more people lose their homes, the distressed sales will put downward pressure on home prices, Newport says.
Foreclosure tracker RealtyTrac expects a “new set of incoming foreclosure waves,” which may roll into the market early next year, says James Saccacio, RealtyTrac’s co-founder.
The S&P data shows Atlanta faring the worst among major metropolitan areas with prices off almost 12% year over year. Foreclosures likely caused that big drop, Blitzer says.
Of the 20 cities, only Detroit and Washington posted positive annual returns of 2.5% and 1.3% respectively, S&P’s data shows.