Home prices continue downward spiral

The residential real estate market continued its steady downward trend at the end of 2007 according to two major housing indexes released yesterday. Standard & Poor’s/Case-Shiller national home-price index for the fourth quarter fell 8.9% from the year-ago period, making it the largest drop since the firm began recording the data in the late 1980s. The Washington, D.C.-based Office of Federal Housing Enterprise Oversight seasonally adjusted house-price index was down 0.3%, the first year-to-year decline since the measure was instituted in 1992. The cities showing the worst home price declines at the end of 2007 compared with the 2006 were Miami (-17.5%), Las Vegas (-15.3%), Phoenix (-15.3%) and San Diego (-15%), the S&P index stated. The region with the weakest prices was the Pacific with a 4.5% fourth-quarter decline from the same period in 2006 according to the OFHEO report. “While the declines are significant and quite large in some areas, the market still needs to work through its overhang of unsold inventory,” said OFHEO Chief Economist Patrick Lawler. “How much further down that inventory will ultimately push prices will depend on a number of factors, including what happens to interest rates and the overall health of the U.S. economy.”