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An index of home prices in the nation’s largest American cities plumbed new depths in March, pushing past a low set during the worst of the Great Recession.
The ominous new drop for the Standard & Poor’s/Case-Shiller index of 20 cities, a key measure that is closely watched by economists, casts further doubt about the future of the housing market’s recovery. The index pushed below its previous bottom hit in April 2009, confirming a much-feared double-dip in home prices.
“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” said David Blitzer, chairman of the S&P index committee, said. “Home prices continue on their downward spiral with no relief in sight.”
The Case-Shiller index showed prices dropped 3.6% from March 2010 and 0.8% from February amid weak demand for homes and a strong market presence for cheap foreclosures and other so-called distressed properties.
The housing market appeared to be headed toward recovery last year, but those gains were largely driven by a popular credit for buyers. Sales and prices have been weak since then.
“Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession,” Blitzer said. “Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.”
Weighing on prices has been the large number of foreclosure properties on the market and a lack of demand from buyers since the credit’s expiration. With prices falling again, economists fear that the nation’s housing market could enter a new downward spiral, with declines pushing more borrowers underwater, triggering more foreclosures and setting off further drops.
Although economists say there are many factors in favor of purchasing a home — including increased affordability and rock-bottom interest rates — falling prices influence buyer psychology because people don’t want to lose money on an investment that may drop in value in the near term.
Twelve of the 20 cities tracked by the index posted fresh lows in March. Those cities were Atlanta; Charlotte, N.C.; Chicago; Cleveland; Detroit; Las Vegas; Miami; Minneapolis; New York; Phoenix; Portland, Ore.; and Tampa, Fla.
Other than Washington, all of the major cities tracked by the index posted a year-over-year decline. Los Angeles was down 1.7%, San Diego fell 4.0%, and San Francisco dropped 5.1%.
When left unadjusted for seasonal variations, 18 out of the 20 cities declined from February to March, with Los Angeles down 0.3%, San Diego down 0.8% and San Francisco falling 0.1%. Seattle, up 0.1%, and Washington, up 1.1%, were the only two cities to post month-over-month gains.]
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