A recovery in housing is starting to look instead like a 'double-dip.'
Any traces of a recovery in the U.S. housing market have disappeared, as prices nationally continued to decline in October and, in some cases, even forged new lows, leading analysts to concede that a double-dip in housing is inevitable.
The latest S&P/Case-Shiller Home Price Index report, released today, revealed that not only are prices still moderating across the country, six of the 20 metro areas surveyed saw home values drop below lows seen in spring of 2009 amid a hefty inventory of unsold homes, foreclosures and a still-sluggish economy.
“The double-dip is almost here, as six cities set new lows for the period since the 2006 peaks,” David Blitzer, chairman of the index committee at Standard & Poor’s, said in a press release. “There is no good news in October’s report. Home prices across the country continue to fall.”
Housing is at the center of the worst economic downturn since the 1930s. The so-called Great Recession marks the end of an almost 30-year boom in credit that peaked with speculative fervor focused on housing. But as credit tightened, housing values stopped rising, leading to a burst in prices in 2006 and 2007 that exposed societywide indebtedness and badly damaged the global economy.
End Of Tax Credit Foreshadowed Latest Slide
While the government attempted to revive the U.S. housing market through a tax incentive program, the expiration of the aid earlier this fall preceded a deceleration in the market that has left most housing prices barely hovering above their 2009 spring lows.
Worse, prices in individual cities like Atlanta, Charlotte, Miami, Portland, Seattle and Tampa have all dropped below those marks.
“Existing home sales and housing starts have been reported for both October and November, and neither is giving any sense of optimism,” Blitzer said. “On a year-over-year basis, sales are down more than 25 percent and the month’s supply of unsold homes is about 50 percent above where it was during the same months of last year. Housing starts are still hovering near 30-year lows.”
The October Case-Shiller report marked the fifth consecutive month where annual growth rates have moderated, with the 10-City Composite up 0.2 percent on the year, and the 20-City re-entering negative territory, with a 0.8 percent drop on the year in October.