The seasonally adjusted Case-Shiller Home Price Index fell 2.1% in the fourth quarter following a 3.3% decline in the prior quarter. The level of the index is close to the bottom registered in the first quarter of 2009 (see Chart 1). Price gains from the first-time home buyer program were only a temporary lift.

From a year ago, the Case-Shiller Home Price Index is down 4.1%, which is the largest drop since the fourth quarter of 2009. With the exception of San Diego and Washington D.C., the remaining 18 metro areas posted year-to-year declines in December. Eleven metro areas posted new index level lows - Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (OR), Seattle, and Tampa.

Declining home prices are troubling because they set forth a vicious cycle of foreclosures, destruction of neighborhoods, a reduction in home building activity and employment tied to housing, a reduction in net worth of households and so on. An additional setback to the current fragile self-sustained pickup in economic activity should be avoided.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.