Home Prices Down for Second Straight Month: IAS360

U.S. home prices fell slightly in August, raising concerns of a new downturn following several months in which the market appeared to be rallying, according to a new report from national foreclosure management company Integrated Asset Services (IAS).

The average price for a home sold in the U.S. fell 0.2 percent in August, according to the monthly IAS360 survey. That follows a 0.5 percent decline in July, which came after a 2.8 percent increase during the second quarter of the year that seemed to indicate a recovery was under way.

The declines could be a sign that the market is about to enter a second wave of economic downturn, said IAS President and CEO Dave McCarthy, noting that the survey is designed to be an early detection tool for housing industry trends.

"Ordinarily, there's nothing ominous about a slowdown at the end of summer," McCarthy said. "But these are hardly ordinary times. We know there's a sizable inventory of bank-owned homes out there that will be listed at some point, and that could ignite a new wave of stress in the housing market."

"Shadow inventory" a looming problem

The large "shadow inventory" of foreclosed homes that have not been listed for sale and basically remain off the market has been a concern for many analysts who follow the housing market. Once those come up for sale, along with another expected wave of new foreclosures in the wake of sharply rising unemployment in the first half of 2009, they could put significant downward pressure on home prices, especially in areas with large numbers of foreclosures.

Most of August's falling prices were driven by a 1.2 percent decline in the Western region of the country. Prices were down a slight 0.1 percent in the South in August, but rose 0.7 percent in both the Northeast and Midwest.

Seven of the nation's 10 hardest hit counties tracked by the survey, those posting the biggest declines since the peak of the housing market, posted price declines in August, some of them severe. Lee County in Florida and San Joaquin County in California, both of which have seen overall prices decline by more than 50 percent in the last three years, saw declines in excess of 7 percent in August.

Other areas saw modest increases. The New York and San Diego metropolitan areas posted increases in excess of 1 percent for August, although both are down nearly 6 percent from their August 2008 level.

The monthly IAS360 Index is based on arms-length real estate transactions in 15,000 neighborhoods spread across 360 U.S. counties in the four major U.S. regions. It includes sales of both new and existing homes and is weighted to account for social, economic, geographic and housing attributes.