(Bloomberg News) Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, showing housing remains mired in a slump almost two years into the economic recovery.
The S&P/Case-Shiller index of property values in 20 cities fell 3.6 percent from March 2010, the biggest year-over-year decline since November 2009, the group said today in New York. At 138.16, the gauge was the weakest since March 2003.
A backlog of foreclosures poised to reach the market means prices may stay depressed, dissuading builders from taking on new-home construction projects. Unemployment at 9 percent and stricter lending conditions are signs that any recovery in housing may take years.
"With the foreclosure pipeline still full to bursting, it's hard to see this downward pressure on prices abating," said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in Toronto. "I wouldn't be surprised to see prices continue to fall this year and maybe into next year."
Economists surveyed by Bloomberg had forecast a 3.4 percent decline from a year earlier, according to the median forecast of 27 economists surveyed. Estimates ranged from declines of 4.9 percent to 2.8 percent.
Other reports today showed consumer confidence unexpectedly declined in May to a six-month low, and business activity in the U.S. cooled more than forecast.
Stocks rose amid speculation the European Union will pledge further aid to Greece. The Standard & Poor's 500 Index was up 0.5 percent to 1,338 at 10:37 a.m. in New York.
Nationally, home prices decreased 5.1 percent in the first quarter from the same time in 2010, and were down 4.2 percent from the previous three months, the biggest one-quarter decrease since the first three months of 2009. At 125.41, the index was the lowest since the second quarter of 2002.
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Home prices in the 20 cities fell 0.2 percent in March from the prior month after adjusting for seasonal variations, a ninth consecutive decrease. Thirteen of the 20 areas posted price declines in March from the previous month, led by Charlotte, North Carolina, and Minneapolis.