May 27, 2008

Housing Slump Continues

Another month, another record drop in home prices and there appears to be no relief in sight:

U.S. home prices dropped at the sharpest rate in two decades during the first quarter, a closely watched index showed Tuesday, a somber indication that the housing slump continues to deepen.

Standard & Poor's/Case-Shiller said its national home price index fell 14.1 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988. The quarterly index covers all nine U.S. Census divisions.

Prices nationwide are at levels not seen since the third quarter of 2004, according to Maureen Maitland, a S&P vice president. However, the index is still up 60 percent versus 2000.

The narrower indices also set record declines in the first quarter. The 20-city index tumbled 14.4 percent, the lowest since that index was started in 2001. The 10-city index plunged 15.3 percent, a record in its 20-year history.

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.

Las Vegas led the way with a staggering drop of more than 25%. Out of the 20 cities surveyed, only Charlotte showed a modest increase of 1% over the previous year's figures.

With foreclosures continuing at a record pace, it is unlikely we'll see a rebound in housing prices anytime soon. In fact, most analysts now say the dismal performance of the housing sector will continue through the summer with a possible rebound during the 4th quarter - too late to do McCain much good in the general election.