Home Prices Decline in October

Home Prices Decline in OctoberThe recovery of the nation’s housing market is being hampered by another session of declining home prices. According to the S&P/Case-Shiller home-price index on December 28, 2010, residence prices in the 20 major metropolitan areas monitored fell by 1.3% in the month of October when compared to the previous month.

Several factors have contributed to the continuing decline in residence prices, such as the expiration of the federal tax credit for homebuyers, the growing number of homeowners that are underwater on their mortgage loans and a large inventory of foreclosed homes that sell quicker than new homes because of their discounted prices. According to the data released by the S&P/Case-Shiller index, house prices declined in every metropolitan area. It is common to see declines in a few of the metropolitan areas, but all 20 major metropolitan areas showing a decline is rare.

As for data related to the previous year, the 20-city home price index shows that four cities have higher home prices than October of 2009. Three of those cities are located in California, San Diego, San Francisco and Los Angeles. The remaining city that has shown year-over-year increases in residence prices was Washington D. C. While four cities have shown year-over-year increases, six have hit their lowest home prices since home prices started their steep decline nearly four years ago. Those six cities include Atlanta, Seattle, Tampa, Miami, Portland, Oregon and Charlotte, North Carolina.

House prices could continue to decline with mortgage rates increasing in recent months and the continuing increase of foreclosed homes hitting the market at discount prices that it difficult for homeowners and builders to compete. If the inventory of foreclosed homes continues to grow, home prices will fall. According to the National Association of Realtors, foreclosed and distressed sales have accounted for over 30% of the home sales nationwide for the last few months. That will likely continue to be the case in the coming months.