Moderate home-sales gains have yet to boost prices, index shows

WASHINGTON -- Home prices fell in December for a fourth straight month in most major U.S. cities, as modest sales gains in the depressed housing market have yet to lift prices.

The Standard & Poor's/Case-Shiller home-price index shows prices dropped in December from November in 18 of the 20 cities tracked. The steepest declines were in Atlanta, Chicago and Detroit. Only Miami and Phoenix saw an increase.

The declines partly reflect the typical slowdown that comes in the fall and winter. Still, prices fell in 19 of the 20 cities in December compared to the same month in 2010. Only Detroit posted a year-over-year increase. Prices in Atlanta, Las Vegas, Seattle and Tampa dropped to their lowest points since the housing crisis began.

"We're 25 years back on our prices," said Larry Murphy, president of Las Vegas-based SalesTraq housing research firm. He reported a median existing home price of $100,000 in January, down from $104,900 in December.

Las Vegas led the nation with 40 percent to 50 percent home price appreciation during the boom years of 2004 and 2005. Then came the crash. Prices have plummeted 65 percent from their peak of $285,000 in 2006, according to SalesTraq. At 3 percent annual appreciation, it would take about 30 years for anyone who bought at the height of the market to regain their lost equity, Murphy said.

Had prices gone up at a constant 3 percent annually since 2001, today's median would be $179,000 instead of $100,000, Murphy noted. At the 6 percent growth experienced from 2001 to 2004, the price would have escalated to $325,000.

Nationwide, prices have fallen 34 percent since the housing bust, and are now back to 2002 levels. A gauge of quarterly national prices, which covers 70 percent of U.S. homes, fell to its lowest point in records dating back to 1987, after being adjusted for inflation.

"The pick-up in the economy has simply not been strong enough to keep home prices stabilized," said David M. Blitzer, chairman of S&P's index committee. "If anything, it looks like we might have re-entered a period of decline as we begin 2012."

There's hope among some economists that an increase in sales could stop prices from falling further by the late winter or early spring.

Paul Dales, senior U.S. economist at Capital Economics, said there are "compelling reasons to believe that the end of the housing crash is finally in sight."

Home prices tend to follow sales by about six months. When sales rise, prices rise, too, and an increase in prices would likely create a positive cycle.

"Stability in home prices will likely persuade more potential buyers that it is now worth getting into the market," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

The Case-Shiller monthly index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The December data is the latest available.

Review-Journal Reporter Hubble Smith contributed to this report.