According to a closely watched index released Tuesday, home prices have sunk by the sharpest annual rate on record in October and there are no signs the housing pain is over.
The Standard & Poor's/Case-Shiller 20-city housing index fell by a record 18 percent from October last year, the largest drop since its inception in 2000. Locally, prices were down 28 percent. The 10-city index tumbled 19.1 percent, the biggest decline in its 21-year history.
Both indexes have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004. Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.
"The numbers are getting worse. And I think they will get quite a bit worse over the next two months because housing demand has plunged since the market went into turmoil," said Patrick Newport, an economist at IHS Global Insight.
None of the 20 cities in the Case-Shiller index saw annual price gains in October - for the seventh consecutive month - and 14 of them posted record year-over-year declines.
Three metro areas clocked in annual declines of more than 30 percent. Phoenix home values lost almost 33 percent, while Las Vegas prices fell nearly 32 percent. San Francisco prices tumbled 31 percent yearover-year in October.
The Los Angeles market, which includes Orange County, dropped 27.9 percent. San Diego was down 26.7 percent. Atlanta, Seattle and Portland, Ore., all recorded their first double-digit annual declines in October. Of course, that month was one of the worst in history for U.S. stock markets, and President George W. Bush was forced to sign a $700 billion bailout plan to help quell the global financial panic.
Since then, the Federal Reserve has slashed interest rates and helped drive down mortgage rates to historic lows. Freddie Mac is set to release its weekly survey of mortgage rates today, and the Mortgage Bankers Association will release its weekly survey of mortgage applications.
So far, favorable mortgage rates have sparked a mini-refinancing boom, but the for-sale market has yet to see much of a boost. Buyers are nervous about getting into the market when home values are sliding and unemployment is rising.
Last week, the government reported that sales of new homes fell in November to the slowest pace in almost 18 years, while new home prices dropped 11.5 percent to $220,400, the largest decline in eight months.
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