Home prices fall at record pace in first quarter

updated 4:51 p.m. ET May 26, 2009

NEW YORK - National home prices are at levels not seen since the end of 2002, but a closer look at data released Tuesday shows the worst may be over for some cities.

The Standard & Poor’s/Case-Shiller National Home Price index reported home prices tumbled by 19.1 percent in the first quarter compared to the first quarter last year, the largest drop in its 21-year history. Home prices have fallen 32.2 percent since peaking in the second quarter of 2006.

In cities across the country home prices varied dramatically, depending on affordability, foreclosure activity and the local economy. The bottom may be in sight in some markets, but nationally home values are expected to decline — though at a slower pace — for the rest of the year.

“We continue to believe that it is unlikely that we are anywhere near a bottom in nationwide home prices,” according to Joshua Shapiro, chief U.S. economist for MFR Inc.

It’s hard to believe it could get much worse for homeowners in Detroit. Homes there are worth what they sold for in 1995. And while that’s good news for homebuyers, the implosion of the auto industry and economic fallout means fewer buyers have the money to qualify for a mortgage.

“I feel like houses here are free,” said Detroit area real estate agent Rose Marie Jouan with Re/Max Showcase Homes. Her house that she sold in 2004 for $200,000 is on the sales block, bank-owned, for $86,000.

In Phoenix and Las Vegas, where prices have plunged by half since their peaks, home values have receded to levels not seen since the beginning of the real estate boom. Phoenix prices are at early 2001 levels and Las Vegas values hover at mid-2002 prices.

Home values in Charlotte, N.C., Portland, Ore., and Seattle are steady at 2005 prices, the best showing of all 20 cities in the Case-Shiller report. All three were some of the last to fall into the housing slump.

The Case-Shiller report offered other hopeful signs the worst may be over for some cities. Denver prices posted an increase over February, while Dallas prices were flat.

Separately, Case Shiller said its 20-city index of home prices fell by 18.7 percent from the year before, and the 10-city index lost 18.6 percent. However, the rates of decline slowed in March, the second straight month they didn’t set record price drops.

Still, there are no signs home prices nationally have hit bottom.

“We see no evidence that a recovery in home prices has begun,” said David M. Blitzer, chairman of the S&P index committee.

All 20 cities showed monthly and annual price declines, with nine setting annual records. Fifteen cities posted double-digit drops and Phoenix, Las Vegas and San Francisco recorded declines of more than 30 percent.

Minneapolis posted a 6.1 percent decline from February to March, the biggest monthly drop on record for any metros in the indexes. Ron Peltier, chairman and chief executive of HomeServices of America, attributed the drop to a jump in distressed sales in March.

Economists will get a look at April housing data Wednesday when the National Association of Realtors releases sales data for previously owned homes, and on Thursday when the Commerce Department puts out numbers for sales of newly built homes. Economists surveyed by Thomson Reuters expect existing home sales to rise 2 percent from March to April, while new home sales are forecast to rise by 1.1 percent.

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