By The Associated Press
WASHINGTON (AP) — U.S. home prices fell in most major cities for the second straight month, further evidence that the housing recovery will be bumpy and weigh on the broader economy in 2012.
The Standard & Poor’s/Case-Shiller index released Tuesday showed prices dropped in October from September in 19 of the 20 cities tracked.
The decline reflects the typical fall slowdown after the peak buying season. Prices had risen modestly in April through August in at least half of the cities tracked.
Still, home prices have fallen roughly 32 percent nationwide since the housing bubble burst five years ago and are back to 2003 levels, according to the index.
Prices are even lower in hard-hit areas, such as Atlanta, Cleveland, Detroit, Phoenix and Las Vegas. Washington, New York, Los Angeles and San Diego have seen the smallest declines.
Home values remain depressed despite some modest progress in the housing market.
Residential construction is likely to add to U.S. economic growth in 2011, the first time that has happened in four years. That’s mainly because apartments are being built almost twice as fast as two years ago – reflecting a surge in renting and weaker home sales.
The Case-Shiller index measures prices for roughly half of all U.S. homes. Prices are compared with those in January 2000 and the index is based on a three-month moving average. The monthly data are not seasonally adjusted.
Atlanta, Detroit and Minneapolis posted the biggest monthly declines. Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began. Prices rose in Phoenix after three straight monthly declines.
David M. Blitzer, chairman of S&P’s index committee, said steep price drops in cities such as Atlanta, Chicago, Cleveland, Detroit and Minneapolis were particularly worrisome because their gains earlier this season were so strong.
“Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness,” Blitzer said. “These markets were some of the strongest during the spring/summer buying season.”
Americans are reluctant to purchase a home more than two years after the recession officially ended. High unemployment and weak job growth have deterred many would-be buyers. Even the lowest mortgage rates in history haven’t been enough to lift sales.
Some people can’t qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that prices will keep falling.
Sales of previously occupied homes are barely ahead of 2008’s dismal figures – the worst in 13 years. And sales of new homes this year will likely be the worst since the government began keeping records a half century ago.
Prices are likely to fall further once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation into mortgage lending practices.
Foreclosures and short sales – when a lender accepts less for a home than what is owed on a mortgage – are selling at an average discount of 20 percent.