October U.S. home prices may have fallen, analysts say

October U.S. home prices may have fallen, analysts say

In a sign that the weak housing market will drag down the economic recovery, analysts expect that soon-to-be-released official reports will show that home prices dipped in October. A Bloomberg survey of 14 economists revealed that property values in 20 U.S. cities dwindled 0.2 percent from October of last year, the first decrease year-on-year since January 2010. The survey comes two days ahead of a S&P/Case-Shiller report. Other figures may also indicate that consumer confidence soared to it highest mark in seven months in December. But, a steady number of foreclosures will still pressure home prices next year, posing a risk to personal finances but improving equity and job outlook. That may help alleviate some pressure, thereby sustaining a recovery in the long run. "The inventory overhang is so big, with foreclosures looming, it'll take five years to absorb the supply," Paul Ballew, chief economist at Nationwide Mutual Insurance Co. based in Columbus, Ohio told Bloomberg. "The consumer is feeling better although there is still a high level of caution and anxiety."

The survey said that residential property values fell 0.7 percent in October after decreasing 0.8 percent in September when it was down 29 percent overall since peaking in July 2006. Some figures show that the U.S. housing market is still stagnating at almost recession levels despite the upturn in the rest of the economy. The Department of Commerce reported on December 16 that housing permits declined to its third-lowest mark ever during November while starts increased for the first time in three months.

Posted by James Fried on Sunday December 26 2010, 2:14 AM EDT. Ref: Bloomberg. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0