U.S. home prices took a step backward for a second month in October, according to a key index released Tuesday.
The S&P/Case-Shiller 20-city composite index fell 1.2% in October to move its 12-month drop to 3.4%. After five straight months of gains starting in April, prices have started to cool. The gauge isn't seasonally adjusted, and there is generally greater interest in buying homes during the spring and summer.
Nineteen of 20 cities saw price drops during the month, with 11 falling by 1% or more. The market in Atlanta has had two terrible months, with a 5% drop in October after a 5.9% decline in September. Cleveland prices also are sharply moving lower.
“The stall earlier this year probably resulted from a slowing of the foreclosure pipeline after the media reported that lenders had cut corners in processing foreclosures,” said Patrick Newport, U.S. economist at IHS Global Insight. He forecasts prices falling another 5% to 10%.
From the peak in 2006, the national gauge is now down by 32.1%, showing the depths that the housing market has fallen into after the bursting of the bubble during the Great Recession.
The Case-Shiller index is calculated as a three-month moving average, meaning sales made in August and September were factored into the data.
Other home-price indexes have shown similar results. Over 12 months, U.S. prices dropped 2.8% in October, according to the Federal Housing Finance Agency, while CoreLogic reported a 3.9% drop over the same period.
About the only source of strength in the housing market is the multifamily segment, as both rents and building starts are climbing. .
Separately, the Conference Board reported a pick-up in consumer confidence in December.
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