(Bloomberg News) Residential real estate prices dropped more than forecast in the year ended September, showing the industry at the center of the 2008 financial crisis continues to struggle.
The S&P/Case-Shiller index of property values in 20 cities dropped 3.6 percent in September from the same month in 2010 after decreasing 3.8 percent in the year ended August, the group said today in New York. The median forecast of 32 economists in a Bloomberg News survey projected a 3 percent decrease.
Unemployment at 9 percent, tight lending standards and a looming supply of distressed properties that may drag down home values further will probably keep hurting housing demand into next year. Sliding prices have left some people with loans that exceed the value of their properties, preventing them from boosting spending on other goods and services.
"We continue to expect home prices to fall through mid- 2012," said Anika Khan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. "We still have an oversupply of existing homes, and distressed transactions continue to drive down home prices."
Stock futures held earlier gains after the report as demand increased at Italy's debt sale and finance ministers meet to discuss the credit crisis. The contract on the Standard & Poor's 500 Index expiring next month climbed 0.2 percent to 1,193.9 at 9:17 a.m. in New York.
Estimates in the Bloomberg survey for the price change ranged from declines of 2.7 percent to 3.9 percent. The Case- Shiller index is based on a three-month average, which means the September data were influenced by transactions in July and August.
The year-over-year decline in September was the smallest in seven months.
Home prices adjusted for seasonal variations fell 0.6 percent in September from the prior month, the biggest decrease since March, after falling 0.3 percent in August. Unadjusted prices also decreased 0.6 percent from August as 17 of 20 cities showed declines. Only Washington, New York and Portland, Oregon, showed gains.
Atlanta, Las Vegas and Phoenix posted new post peak lows in September, the report showed.
The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.