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October Home Prices Return to 2003 Levels without Double Dip: S&P's Case-Shiller

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The rate of decline in home prices slowed in October from the previous month, and prices remain flat after the spring and summer gains, according to the Standard & Poor’s (S&P) Case-Shiller Home Price Indices. Its 10-city and 20-city composite indices declined 6.4% and 7.3%, respectively, in October, landing the average home prices at similar levels seen in the autumn of 2003. It also marks nine months of improved data, beginning in the early of 2009. David Blitzer, chairman of the Index Committee at Standard & Poor’s, told HousingWire that he is not concerned about a double-dip in prices. "The most recent double dip in home prices was at the start of the 1980s when the economy went through two back to back recessions while Federal Reserve policy made a number of sharp turns up and down. Given that the current Fed policy has been in place for some time and that everyone seems to agree that the next move is a small shift to tighter money which will most likely begin sometime in 2010, I doubt there will be enough volatility in the economic environment to cause a double dip in home prices," Blitzer told HousingWire. Although the current economic waters remain murky, the usual signs of the double dip are missing. Blitzer said double dips occur in environments ravaged by erratic and surging foreclosures, sharp drops in consumer confidence, shifting Fed policies and a plunge in the stock market. In the report, Blitzer said existing home sales have been strong in recent months, burning through the remaining inventory, a sign of elevated consumer confidence. “The turn-around in home prices seen in the Spring and Summer has faded with only seven of the 20 cities seeing month-to-month gains, although all 20 continue to show improvements on a year-over-year basis. All in all, this report should be described as flat,” Blitzer said. “At the same time, housing starts remain weak, fears that the market will be swamped by a wave of foreclosures are heard and government programs aimed at the housing market will expire in the first half of 2010." From the peak in home prices in Q206 to April 2009, the 10-city composite has dropped 33.5%, and the 20-city composite is down 32.6%. Las Vegas continues to show signs of improvement. Prices dropped for 38 consecutive months in Sin City, dropping 55.4% from its peak in August 2006. On the brighter side, San Francisco reported seven consecutive months of improvement, San Diego reported six, both Los Angeles and even Phoenix reported five months of gains. Write to Jon Prior.

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