Still No Sign of Recovery in Home Prices

Housing markets nationally saw values slide during the first quarter, according to quarterly data from Standard & Poor's and Freddie Mac.

In 13 of 20 metro areas covered by the report, home values declined, according to the S&P/Case-Shiller National Home Price Index. The index declined 0.7% from the fourth quarter of 2006. It was also down 1.4% from the first quarter of last year.

The rating agency noted that the first-quarter 2007 score marked only the second time in the history of the survey when annual home price change was negative. The first time occurred in the period between 1990 and 1991.

"The fall of the national index into negative territory, after more than 15 years of positive annual growth, is a reaffirmation of the pullback in the U.S. residential real estate market," said Robert Shiller, chief economist at MacroMarkets, in a news release. "The national index was yielding solid returns as recently as a year ago."

In the first quarter of 2006, growth rates were up 11.5% from one year earlier.

He said most U.S. cities are moving "deeper into negative territory," with Detroit and San Diego - at negative 8.4% and 6%, respectively - leading the way.

The once-hot markets of Phoenix and Las Vegas had the sharpest drop from their peak. Phoenix, which had posted a 49.3% gain in home prices for September 2005, was down 3% in the first quarter of this year. Las Vegas - up 53.2% in September 2004 - was down 1.6%.

Year-over-year, just seven of the 20 metro areas included in the index posted positive rates of home price appreciation. They were Atlanta, Charlotte, Chicago, Dallas, Miami, Portland and Seattle.

The metro areas that posted positive rates of appreciation between the fourth quarter of last year and the first quarter of this year were Atlanta, Boston, Charlotte, Dallas, Portland and Seattle.

Freddie Mac's conventional mortgage home price index tells a similar story.

Nationally, Freddie Mac said that home price growth slowed sharply in the first quarter.

On an annualized basis, Freddie Mac said that home prices increased at a 1.3% rate in the first quarter, the slowest rate of growth seen in 14 years.

"With home-sales prices rising just 1.3%, house price appreciation did not keep pace with the overall level of inflation during the quarter, and as the housing market settles near the bottom of its cycle during the second half of this year, we will likely see national home price growth slow further with price declines in many parts of the U.S.," said Frank Nothaft, Freddie Mac's chief economist, in a news release.

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