(Bloomberg News) Residential real estate prices fell more than forecast in November, showing distressed properties are hampering improvement in the U.S. housing market.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent from November 2010 after decreasing 3.4 percent in the year ended in October, the group said today in New York. Economists projected a 3.3 percent drop, according to the median estimate in a Bloomberg News survey.
Another wave of foreclosures threatens to keep the pressure on prices and delay recovery in the industry that precipitated the last recession, underscoring the Federal Reserve's view that housing "remains depressed." More stability in real-estate values may be needed to persuade Americans to take advantage of record-low mortgage rates.
"We've seen home prices take a turn for the worse after showing some signs of a bottom, and we do think that there is more downside from here," said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York, who correctly forecast the price decline. "If you get stronger jobs and wage growth, it'll go far in alleviating some of the pipeline foreclosures that have yet to happen."
Stock-index futures held gains after the figures. The contract on the Standard & Poor's 500 Index maturing in March rose 0.5 percent to 1,315.7 at 9:22 a.m. in New York.
Estimates for the price change ranged from declines of 3.9 percent to 2 percent, according to the forecasts of 30 economists in the Bloomberg survey. The Case-Shiller index is based on a three-month average, which means the November data was influenced by transactions in September and October.
Month To Month
Home prices adjusted for seasonal variations fell 0.7 percent in November, matching the drop in October. Unadjusted prices declined 1.3 from October as 19 of 20 cities showed declines. Phoenix posted a 0.6 percent gain from October.
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.
Eighteen of the 20 cities in the index showed a year-over- year decline, led by an 11.8 percent slump in Atlanta and a 9.1 percent decrease in Las Vegas.