The stabilization of home prices during the summer is beginning to crumble, according to the Federal Reserve Board's November survey of economic conditions released Wednesday afternoon.
According to the Fed's 'Beige Book,' price declines were observed in around the Fed districts New York, Philadelphia, Atlanta, and Kansas City.
The survey covers economic and market conditions from mid-October to mid-November.
The previous Beige Book (issued Oct. 20) noted that home prices were stable in most of the 12 Federal Reserve districts.
The new Beige Book says residential prices are "mixed" with values up year-over-year in the Dallas district. "The Chicago District reported that high inventories of unsold homes continued to be a drag on new residential construction and home prices," the government said.
Housing economists believe the coming year will bring even more REO inventory to the market, suppressing home prices throughout 2011. Coupled with rising mortgage rates, the new year could be particularly tough for originators that are counting on purchase money activity picking up. However, new employment numbers which show increased hiring by U.S. companies could help bolster the housing market.
Currently, refinancings account for about 75% of all new residential loan applications.
