Home prices in 20 major U.S. cities dropped 1% in August compared with July and fell a record 16.6% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's.
Prices have fallen 20.3% from their peak in June 2006.
"The downturn in residential real estate prices continued, with very few bright spots in the data," said David Blitzer, chairman of the index committee at S&P.
Prices have fallen in all 20 cities compared with a year ago. In the past year, Phoenix and Las Vegas have had the largest declines, down nearly 31% in both cities. Prices had fallen the least in Dallas (down 2.7%) and in Charlotte (down 2.8%). Prices fell more than 20% in six cities.
And don't expect people to rush in a buy all of these great bargains:
Wounded by the financial crisis, U.S. consumer confidence plunged in October, reaching an all-time low in the series' 41-year existence, the Conference Board reported Tuesday.
Despite falling gasoline prices, the October consumer confidence index fell to 38 from an upwardly revised September reading of 61.4. Economists surveyed by
MarketWatch had expected an October reading of 52. See Economic Calendar.
Expectations turned "significantly more pessimistic," with the percentage of consumers expecting business conditions to worsen over the next six months rising to 36.6% from 21%, and those expecting fewer jobs rising to 41.5% from 26.9%.
"Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season," said Lynn Franco, director of the Conference Board Consumer Research Center.
So -- what will it take to see a bottom in housing:
1.) Year over year price stabilization. This is by far the most important thing to look for. When prices stop dropping then we have a bottom.
2.) But this won't happen until we have a bigger drop in inventories. Right now the existing homes market is coming off of a record high in terms of absolute numbers. The months of available supply at current sales rates is still at high levels as well. This inventory has to get worked off before we can see any stabilization. The problem is it's going to take awhile to get this done. And inventories won't drop until we deal with the massive vacancy rates in the housing market
I'm loathe to put any time possibility on this; there are just too many factors to consider and deal with. My best guess is that maybe (and that's a big maybe) by next summer we'll see enough of a work-off in inventories to see a price bottom.