NEW YORK CITY-With the economy and consumer confidence remaining in limbo, home prices are continuing their downward spiral. The latest S&P/Case Shiller home price indices show that 20 American cities declined by 4% in the fourth quarter of 2011, marking the lowest levels since the housing crisis began in mid-2006.
In December alone, data shows that 18 out of the 20 cities saw monthly declines from November, including new lows for already hard-hit areas in states like Georgia, Nevada, Washington, Illinois and Florida. At -12.8%, Atlanta continued to post the lowest annual return, followed by Las Vegas (-8.8%), Chicago (-6.5%), Seattle (-5.6%) and Tampa (-4.3%).
“In terms of pricing, the housing market ended 2011 on a very disappointing note,” says David M. Blitzer, chairman of the index committee at S&P Indices, in the report. “While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.”
According to S&P, the National Composite fell by 3.8% in the fourth quarter alone, and is down from 33.8% from its second quarter 2006 peak. In addition to both monthly composites, 10 of the cities saw home prices fall by more than 1% during the month of December from November—and Blitzer explains the trend may continue to get worse before it gets better.
“The pick-up in the economy has simply had not been strong enough to keep home prices stabilized,” he says. “If anything it looks like we might have re-entered a period of decline as we begin 2012.”
Gary Painter, associate professor of policy, planning and development and director of research at USC Lusk Center for Real Estate, tells GlobeSt.com that he is expecting an obvious flattening of house prices as the year goes on.
"What we need to keep our focus on is what houses are being transacted," he says. "New lows for house prices is certainly not encouraging for the home industry, and I think the home building industry and other parts of the housing market should focus on how the overall job market is doing. There's going to be a little bit of a lag in terms of where home prices are going and what are transacting in previous periods to where the housing market is today."
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