The ongoing fall in home prices in all the major U.S. cities for the eighth month in a row in February could bring back the prices of the housing sector to the same levels of the recession in 2009, finds a new survey.
According to the Standard & Poor's/Case-Shiller 20-city index released Tuesday, housing prices sank 3.3 percent in February from a year ago and 1.1 percent from January, providing fresh evidence that the U.S. property market is still languishing.
Though the index is only slightly higher than the level witnessed in April 2009 when the national average hit rock bottom, analysts anticipate the March index to fall well beyond the low point.
Paul Dales, senior U.S. economist at Capital Economics, stated, “House prices have started to drop at a faster pace and on some indices are now falling at rates not seen since the financial crisis.
“The Case-Shiller index measures the average change in prices over the previous three months, so February’s figure also reflects what happened in December and January.
"That means it is usually a little slower to pick up the latest trends, suggesting it could soon show that prices have started to fall more sharply.”
"There is very little, if any, good news about housing. Prices continue to weaken, while trends in sales and construction are disappointing.”-- David M. Blitzer, chairman of the index committee at Standard & Poor’s
Prices fall in all major cities
As of February, the prices in 10 metros hit their lowest point since 2006 or 2007 when the housing sector was booming.
These included Atlanta, Charlotte, Chicago, Las Vegas, Miami, New York, Phoenix, Seattle, Portland in Oregon and Tampa.
The steepest declines from January were recorded in Minneapolis, San Francisco, Chicago and Miami. Prices in Minneapolis plummeted 3.1 percent in February, registering the sharpest drop for the second consecutive month.
Detroit was the only market to show a monthly gain where prices rose by 1 percent in February after hitting a new bottom in January.
Nineteen of the 20 cities tracked by the index posted a year-over-year decline. Washington was the only one area in the United States where prices surged over the year, showing a 2.7 per cent increase.
The home prices in Atlanta, Cleveland, Las Vegas and Detroit are still below their 2000 levels.
Reasons for falling prices
The drop has been attributed to the weak demand for houses, foreclosures, high unemployment, stricter lending rules, the so-called distressed properties and the harsh winter weather which has hampered construction work.
David M. Blitzer, chairman of the index committee at Standard & Poor's, stated, "There is very little, if any, good news about housing. Prices continue to weaken, while trends in sales and construction are disappointing.
“Recent data on existing-home sales, housing starts, foreclosure activity, and employment confirm that were are still in a slow recovery.”