Nationally, prices decreased 4 percent in the fourth quarter from the same time in 2010 to the lowest level since mid-2006. They fell 3.8 percent from the previous three months before seasonal adjustment, and fell 1.7 percent after taking those changes into account.
"The pickup in the economy has simply not been strong enough to keep home prices stabilized," David Blitzer, chairman of the S&P index committee, said in a statement. "If anything, it looks like we might have re-entered a period of decline as we begin 2012."
Demand Steadies
Recent reports indicate demand is steadying. Existing-home sales rose to a 4.57 million annual rate in January, the National Association of Realtors reported last week. While it was the best showing since May 2010, distressed properties made up the largest portion of all purchases since April.
Toll Brothers Inc. and D.R. Horton Inc. are among builders benefiting from job growth as well as cheaper properties and record-low mortgage rates.
"We're optimistic," Doug Yearley, chief executive officer at Horsham, Pennsylvania-based Toll Brothers, said in a Feb. 22 interview with Bloomberg Television. "We have orders that are up significantly. We're seeing deposits up, we're seeing traffic up."
Excess supply of distressed properties is dragging down values for all houses. About 5 million houses have been lost to foreclosure in the U.S. since 2006, according to RealtyTrac Inc. Banks may seize more than 1 million U.S. homes this year after legal scrutiny of their foreclosure practices slowed actions against delinquent homeowners in 2011, it said last month.
"Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery," Fed Chairman Ben S. Bernanke said in the cover letter of a Fed study on the housing market that he sent to Congress last month.