Home prices continue to drop

WASHINGTON -- U.S. home prices fell for a third straight month in Las Vegas and in nearly all other cities tracked by a major index. The declines show that most homeowners are not reaping the benefits from an improving housing market.

Prices dropped in November from October in 19 of the 20 cities tracked, according to the Standard & Poor's/Case-Shiller home-price index released Tuesday. The steepest declines were in Atlanta, Chicago and Detroit. Phoenix was the only city to show an increase.

The declines partly reflect the typical fall slowdown after the peak buying season.

Still, prices fell in 18 of the 20 cities in November compared to the same month in 2010. Only Washington and Detroit posted year-over-year increases.

Prices in Atlanta, Las Vegas, Seattle and Tampa fell to their lowest points since the housing crisis began, according to the national survey, and prices have fallen 33 percent nationwide since the housing bust, to 2003 levels.

However, Las Vegas-based Home Builders Research reported the opposite -- a median existing-home price of $114,000 in November, up from $110,000 in October. The new-home median was $204,221, compared with $196,360 in the previous month.

The Greater Las Vegas Association of Realtors also reported median home prices increasing from $121,000 in October to $125,000 in November, based on sales from the Multiple Listing Service.

Data can vary based upon methodology, Home Builders Research President Dennis Smith said.

He doesn't doubt the methodology used for the Case-Shiller survey, but said his data, collected from recorded escrow closings at the Clark County assessor's office, show areas of Las Vegas where home prices have stabilized or improved in the last year.

"Prices will vary from month to month, up and down," Smith said Tuesday, noting that December's resale median dropped back to $110,000.

"We're bouncing along that bottom," he added. "Resale prices could continue to soften a little, but new home prices have been the same for a year and a half."

The Case-Shiller index covers half of all U.S. homes. It compares price with those in January 2000 and creates a three-month moving average. The November data are the latest available.

Dave Guarino, director for Standard & Poor's in New York, said the index includes only single-family homes, and does not include condos, multifamily or new-home construction. Also, foreclosure sales are included only if the sale occurred on the open market.

Home Builders Research uses data for all residential unit sales in Las Vegas, including condos and apartment conversions.

If there's a large change in prices of a sales pair relative to all price changes in an area, it's possible the home was remodeled, rebuilt or neglected in some manner between the first and second sale, Guarino said.

Home values remain depressed despite some hopeful signs at the end of last year.

Sales of existing homes rose in the last three months. Homebuilders are more optimistic after seeing more people express interest in buying this year. And home construction picked up in the final quarter of last year, which helped housing contribute to broader economic growth.

"People are waiting until the market gets better. That's the chicken and the egg," said Gary Painter, research director at the University of Southern California's Lusk Center for Real Estate. "What we are also observing is a dearth of normal inventory as people move up the ladder. Those moves aren't there, so the inventory isn't there."

Home prices tend to follow sales, which remain below healthy levels. And a large number of vacant homes are sitting idle on the market, which means prices will likely stay unchanged for several years, Capital Economics senior U.S. economist Paul Dales said.

"The most likely scenario in the U.S. is that in 2012 prices will bob around a bit, with one month's gain being reversed the next month," Dales said. "But in general, over the next couple of years, house prices will do nothing more than remain broadly stable."

Dales said prices might not rise consistently until 2015. He said lower unemployment and better pay raises are essential to a full housing rebound.

Among other improvements needed:

■ The supply of homes for sale must decline further. The inventory fell in November to a seven-month supply, although a healthy supply is about six months.

■ Sales need to rise consistently and more first-time buyers must drive the increases. First-time buyers stay longer and invest in their homes, which helps neighboring home values rise.

■ More young people and immigrants must buy. Declining immigration and a rise in renting has hampered home sales.

■ More than a million homes at risk of foreclosure must be cleared from the market. Many are in limbo because a government investigation into questionable mortgage lending practices, which has dragged on for more than a year.

■ Banks must further loosen lending requirements.

Conditions are improving for those in position to buy a home. Job growth is up, prices are down, mortgage rates are at record lows and rental prices have risen sharply since the housing bust.

But many people can't afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.

"The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand," said David Blitzer, chairman of S&P's index committee.

Many economists say the United States could be experiencing what similarly occurred in Britain in the 1990s, when it took four years for home prices to rise again after falling prices left homeowners with little financial equity in their homes.

Las Vegas Review-Journal writer Hubble Smith contributed to this report.