Home Prices Continue to Fall
As Market Remains 'Grim'

Prices of existing single-family homes fell at a record rate in October in some of the nation's biggest cities, according to the Standard & Poor's/Case-Shiller Home Price Indices.

A composite of prices in 10 cities showed an annual decline of 6.7%, a record low. The prior record was a 6.3% decline in April 1991. The index dates back to 1987. (See a summary of the report.)

A 20-city index showed home prices falling by an annual rate of 6.1%.

The indices have shown falling year-over-year home prices every month this year, with the monthly figures being worse than the month before for 23 straight months.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert J. Shiller, chief economist at MacroMarkets LLC.

He noted that prices in every metropolitan statistical area surveyed fell in September and October, and 11 of the 20 MSAs had their single-largest monthly decline on record in October.

Miami had the largest year-over-year decline, 12.4% in October, followed by Tampa, 11.8%; Detroit, 11.2%; and San Diego, 11.1%. Only Charlotte, Portland and Seattle reported year-over-year price increases.

Home prices are going to decline "considerably further" in coming quarters, likely reaching a double-digit pace on a year-over-year basis, according to Joshua Shapiro, chief economist for MFR Inc. "Given conditions relating to mortgage financing, and the number of unsold homes that is piling up, all regions are likely to continue on a negative trend in the months ahead, and those with the greatest oversupply (at the bottom of the pack at the moment) will continue to fall by the most," wrote Mr. Shapiro in a research note.

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