Record fall in US house prices

American house prices dropped by nearly a fifth, a record, in the year to January, according to figures released today.

The Standard & Poor’s/Case-Shiller index of 20 major cities tumbled by a record 19%, the largest decline since the index started in 2000. The 10-city index dropped 19.4%, also a new record.

All 20 cities in the report showed monthly and annual price declines, with 13 having new annual records. Prices dropped by more than 10% in 14 cities.

“There are very few bright spots that one can see in the data,” David Blitzer, of S&P said. “Most of the nation appears to remain on a downward path.”

But in Cleveland, Los Angeles, Las Vegas and Washington D.C. – areas all ravaged by foreclosures – annual price declines eased.

Six cities, including Minneapolis, Charlotte, Seattle and New York, showed smaller price declines in January compared to December.

Faring the best were Dallas, Denver and Cleveland with annual price declines of around 5% in January.

Last week, the National Association of Realtors said sales of previously occupied homes unexpectedly jumped in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.

Prices in the 20-city index have plummeted 29% from their peak in summer 2006, while the 10-city index has fallen 30%. Prices have sunk back to levels not seen since late 2003.

To provide some relief, Congress in February passed a new $8,000 (€6,000) tax credit for first-time homebuyers and President Barack Obama is directing $75bn (€56.5bn) to a new foreclosure prevention plan.

But their success could depend on how far the US economy falls. While sales are showing some signs of stabilisation, some economists expect prices to keep falling for the rest of this year – and maybe even longer.