The S&P/Case Shiller home price indices, closely-watched gauges of the U.S. housing market, fell by record amounts in October as the credit crunch and deteriorating economy made purchasing a home an increasingly unattractive option and distressed sales became much more common.
The Case-Shiller 10-city index fell by 19.1% in October from a year ago and is down 3.6% from September, said analysts at Standard & Poor’s, a division of McGraw-Hill (MHP). The broader 20-city index fell 18% from a year ago and was down 2.2% from a month ago.
S&P analysts said that now 14 out of the 20 metropolitan areas tracked show record percentage rates of annual decline and in addition, 14 metropolitan areas reported housing price declines in excess of 10% from a year ago.
“The bear market continues -- home prices are back to their March, 2004, levels,” said David Blitzer, chairman of the index committee with the rating agency.
The decline in home prices during October came as stocks plummeted and the credit crunch reached its 2008 apex. Within that month, Congress had to step in to save the financial sector by crafting a $700 billion bailout package and the world’s central banks had to drastically cut interest rates.
"Given the current intensity of the credit crisis, and the sharp contraction that the economy is currently experiencing, both new and existing home sales are extremely weak while foreclosures continue to climb," said FOXBusiness Chief Economist Mark Lieberman.
Of the metropolitan areas, the sun-soaked city of Phoenix took the brunt of the pain. S&P said Phoenix home values have fallen 32.7% from a year ago, slightly more than Las Vegas, which is down 31.7% from a year ago. The San Francisco metropolitan area is down 31% from a year ago.
Three areas that had shown relative resiliency were now posting double-digit percentage declines from a year ago: Seattle, Portland, Ore., and Atlanta.
The best-performing metropolitan areas were Dallas and Charlotte, N.C. Dallas home prices are down 3% from a year ago, while Charlotte fell by 4.4%.
