The Wall Street Journal

1 February  2012

U.S. home prices fell again in November, according to the Standard & Poor’s Case-Shiller indexes, indicating continued struggles for the beleaguered housing market.

The sector has remained sluggish despite lower prices and interest rates due to a slowly improving economy, an abundance of foreclosures and tighter mortgage requirements.

“Tighter lending standards and widespread expectations of further declines in home values have been depressing home sales on a larger scale,” said economists Ellen Zentner, Aichi Amemiy and Jeffrey Greenberg of Nomura Economics Research in a note to clients. “In addition, a growing share of distressed assets in home sales that are typically sold at a 20% discount are putting downward pressure on house prices.”

For November, the Case-Shiller index of 10 major metropolitan areas and the 20-city index both fell 1.3% from the previous month. David M. Blitzer, chairman of the index committee at S&P Indices, also noted that 19 of the 20 major U.S. metropolitan markets covered by the indices in November saw prices decline from October, with just Phoenix showing an increase. Atlanta, Las Vegas, Seattle and Tampa posted new index level lows.

“The only positive for the month was Phoenix, one of the hardest hit in recent years,” Mr. Blitzer said. “Annual rates were little better as 18 cities and both composites were negative.” Just Detroit and Washington D.C. notched year-over-year gains.

The 10-city and 20-city composites posted annual returns of negative 3.6% and negative 3.7%, respectively, compared with November 2010. Hard-hit Atlanta had the worst year-over-year performance, declining 11.8%.

On a seasonally adjusted basis, which aims to take into account the slower selling season in the winter, three cities — Denver, Minneapolis and Phoenix — posted monthly increases. The overall 20-city index was down 0.7% from the previous month on a seasonally adjusted basis.

There have been indications more recently of some stabilization in home sales, and economists say that may show up in price data later this year. “Economic growth has accelerated, jobs growth has picked-up and confidence has increased. Banks even seem a little more willing to lend. After the normal lead time of around six months, the resulting rise in home sales should go some way to bringing an end to the five-year-long decline in house prices,” said Paul Dales, senior U.S. economist at Capital Economics.