Home Prices Down Nearly 7 Percent Since August

By:: Peter King | November 09, 2010

U.S. home prices have taken a sharp downturn in recent months, plunging nearly 7 percent since hitting a recent peak in mid-August, according to a new report out today.

Although the decline was due in part to the aftereffects of the homebuyer tax credit, uncertainties about the impact of the robo-signing foreclosure scandal and the usual seasonal weakening of the housing market headed into winter also played a role, according to Alex Villacorta, senior statistician with Clear Capital, which released the monthly report.

Nationally, the decline wiped out all the gains registered over the past year, with prices down 1.2 percent on an annual basis. Overall, national prices remain 7.7 percent above their low point reached in early 2009, according to the Clear Capital Home Data Index Market Report for October 2010.

Only four major metropolitan areas posted price increases over the past quarter, led by Washington, D.C. with a 2.0 percent gain. The New York City; Bridgeport, Conn.; and Honolulu, Hawaii areas all showed lesser quarterly increases.

California markets continue to show strong annual gains despite registering price declines in the most recent quarter. Home prices in the San Francisco, San Diego, Los Angeles, Riverside and San Jose regions continue to show gains of approximately 7-9 percent over last year. The San Francisco-Oakland market showed the greatest sign of softening, with a 2.4 percent decline in the most recent quarter, compared to declines of 0.4-1.5 percent among the others.

On a regional basis, home prices in the Midwest showed the steepest quarterly declines, down 8.1 percent, followed by the South at 4.1 percent. The Western region showed a 3.1 percent quarterly decline, while the East was down 2.2 percent. Nationally, home prices were down 5.0 percent compared to the previous quarter.

Of the four, only the West showed an annual gain, up 1.4 percent from the same period one year ago. The South had the biggest annual decline, down 2.3 percent, with the Midwest down 1.8 percent and the East down 1.1 percent.

Although the federal homebuyer tax credit expired at the end of April, its aftereffects continue to show up in housing market data. Homebuyers who signed purchase contracts by the deadline still had several months to close those sales, so sales prices contracted before April 30 showed up as closed sales throughout the summer months. As a result, the credit continued to boost reported sales prices as late as August.

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