U.S. home prices hit their lowest level since subprime mortgages began imploding in mid-2006, with the S&P/Case-Shiller National Index falling 3.8 percent in December compared to the prior year, according to data released Tuesday.
Prices have declined steadily since a federal tax credit for first-time homebuyers expired in 2010. However, the national decline was lower than forecasts by analysts polled by Reuters, who had expected a 5.5 percent annual decline.
Average prices fell 3.9 percent for the 20-city composite index and 4 percent for the 10-city composite index, and home prices for both the 20-city and 10-city composites fell 1.1 percent compared to the prior month.
In terms of prices, the housing market ended 2011 on a very disappointing note, said David Blitzer, chairman of the S&P index committee, in a statement.
While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.
Only Detroit, boosted by a rebound in the auto industry, had an annual price gain of 0.5 percent.
Atlanta, victim of a surge of foreclosures during the downturn, continued to be the weakest market, falling 12.8 percent compared to the prior year to a new pricing low. Las Vegas, Seattle and Tampa also hit new lows during December.
The Case-Shiller Index data is delayed because prices are taken from closings, which occur one or two months after contracts are signed. Thus, the bleak numbers in December do not necessarily reflect current conditions.
Nonetheless, widespread pricing erosion continued across the country. Eighteen of 20 major cities had month-over-month price declines, with only Miami and Phoenix posting increases of 0.2 percent and 0.8 percent, respectively.
“After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until today’s report we had believed the crisis lows for the composites were behind us, said Blitzer.
Now it looks like neither was the case, as both hit new record lows in December 2011.