House Price Decline Accelerates Led by Weakness in Midwest Markets

Written By: Dean Baker  |  Posted: Tuesday, July 20th, 2010

The inventory of unsold homes is equal to 9.7 months of sales at the January selling rate.
Monthly Change in Home Prices. The Case-Shiller 20-City index showed a decline for the sixth consecutive month in March, as 13 of the 20 cities reported a drop in prices. The drop in the seasonally unadjusted index was 0.5 percent, bringing the annual rate of decline over the last quarter to 6.8 percent. (The unadjusted index is preferred in the current market due to the high percentage of real estate owned (REO) sales, which do not follow normal seasonal patterns.)

Most of the sharpest declines were in Midwest cities, with prices in Detroit falling 4.1 percent; Minneapolis, 2.7 percent; and Chicago, 2.3 percent. Over the last quarter, prices in these cities have fallen at a 24.4 percent, 20.7 percent, and 21.7 percent annual rate, respectively. While the price decline in Detroit is clearly the result of the weakness of its economy, the declines in the other two cities are the result of over-building during the housing boom. Prices are again declining rapidly in several other cities also. In Portland, prices fell just 0.1 percent in March but have fallen at a 15.9 percent annual rate over the quarter. In Seattle, prices rose by 0.1 percent in March but have fallen at a 9.9 percent rate over the quarter. Prices in Atlanta fell by 1.8 percent in March and have fallen at a 16.8 percent rate over the last quarter. In Dallas, prices rose by 0.4 percent in March but have still declined at a 10.1 percent rate over the quarter.

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