Home Prices Fall 2.5% as Market Recovery Still Weak
U.S. home prices unexpectedly slipped in December but the annual rate of decline slowed, reinforcing the housing market’s rocky road to recovery, Standard & Poor’s/Case-Shiller indexes showed on Tuesday.
The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.
A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.
The S&P/Case-Shiller U.S. national home price index, which covers all nine census divisions, fell 2.5 percent in the fourth quarter from the same time a year earlier.
This measure, like the 20-city and 10-city indexes, have seen smaller annual declines all through 2009.
On a seasonally adjusted basis, the 20-city index rose 0.3 percent in December, S&P said, matching the November increase.
The future of home prices remains difficult to forecast, though, as the market at some point will have to weather the withdrawal of government measures to boost home buying, Yale economist Robert J. Shiller told CNBC.
“This isn’t a forecast, but it’s a worry that home prices might drop substantially from here forward once this support is taken away,” Shiller said in a live interview after the report was released. “Mortgate rates will go up, the economy might double-dip, the expectations for housing which helped drive the market might change suddenly once people see this support being withdrawn.”