Home Prices Post Biggest Decline Since 1991
The decline in prices of existing U.S. single-family homes accelerated in August and fell at their fastest pace since 1991, according to the Standard & Poor's/Case Shiller national home price index.
S&P said its composite month-over-month index of 10 major metropolitan areas declined 0.8 percent in August to 214.35, for a 5 percent year-over-year drop, S&P said in a statement on Tuesday.
"The fall in home prices is showing no real signs of a slowdown or turnaround," Robert Shiller, founder of the indexes and chief economist at MacroMarkets LLC, said in a statement.
The 10 city index fell 0.5 percent in July from June. The worst annual decline in the index was a 6.3 percent drop in April 1991.
The month-over-month index of 20 metropolitan areas fell 0.7 percent to 197.16 in August from July, bringing the measure down 4.4 percent from the year-ago period.
Housing Slump Worsened
Both indexes have registered falling prices for the past year as soaring inventories of homes and tight lending conditions worsened the housing slump.
The credit crisis deepened in August when defaults on risky loans drove investors away from securities which fund lending to even the best-rated borrowers.
Tampa and Detroit registered the steepest yearly price drops of 10.1 percent and 9.3 percent, respectively, according to the index.
Tampa and seven other regions including Miami, Las Vegas, San Diego and Washington had their lowest recorded annual returns in August, it said.
Home prices are likely to register a record 7 percent year-over-year drop by December, according to economists at Goldman Sachs.
Such declines would have to be paired with 0.5 to 1 percentage point drops in mortgage rates to boost affordability measures to those preceding and during the housing boom, other economists said.