Home Price Index

WASHINGTON - January 29, 2008 - An index that measures home prices in major U.S. cities will give investors and homeowners a sense of how deeply the housing market fell late last year.

The Standard & Poor’s/Case-Shiller home price index for November, due at 9 a.m. Tuesday, comes after U.S. home prices as measured by the 10-city Case-Shiller index fell in October for the 10th consecutive month, dropping 6.7 percent, the largest drop since early 1991.

A second, broader Case-Shiller index, which measures 20 metropolitan areas, fell 6.1 percent in October. Two Florida cities, Miami and Tampa were the worst-performing cities, followed by Detroit, Las Vegas, Phoenix and San Diego.

More bad news for the housing market came out Monday, with the Commerce Department reporting that new home sales plunged in 2007 by the largest amount on record while home prices tumbled sharply in December.

The Commerce Department reported Monday that sales of new homes dropped by 26.4 percent last year to 774,000. That marked the biggest decline on record, surpassing the old mark of a 23.1 percent plunge in 1980.

The National Association of Realtors reported last week that sales of single-family homes fell by 13 percent last year, the biggest decline since a 17.7 percent drop in 1982. The median price of a single-family home fell to $217,800 in 2007, down 1.8 percent from 2006. Analysts forecast more trouble in 2008 as the housing sector tries to emerge from its worst slump in more than two decades.

The Case-Shiller index examine price changes for the same properties over time instead of calculating a median price for houses sold during a particular month or quarter. Doing so prevents the data from being skewed by changes in the mix of houses sold. For example, sales of more expensive homes in any particular month or quarter would push median prices upward.

Home Price Index
Associated Press