Clear Capital: Home prices drop in September as weak markets head into double-dip
National home prices dropped 0.2% over the three months ending in September, according to real estate data provider Clear Capital. It's the first quarterly drop since May. When Clear Capital reported home prices increased in August, analysts warned that prices would possibly contract well into 2011. All four regions of the country did see prices stay above last year's total. But the September slowdown could send weaker markets into a double-dip. All 15 of the lowest performing markets saw three-month price drops for the first time since June. The amount of REO properties in these markets climbed 29 basis points. For the nation, REO accounted for 23.2% of the market up 11 bps from last August. Alex Villacorta, senior statistician of Clear Capital, said the latest results indicate a substantial price correction has taken place in many major markets. "With the effects of the recession still being felt by home buyers and sellers, the lack of demand is causing strong markets to lose their upward momentum, while sending weak markets into double dip territory," Villacorta said. He added, "National prices are still 10 percent above their 2009 lows, so the risk of new record lows this year remains small." The Midwest markets of Cleveland, Milwaukee, Detroit, and Chicago and the Southern market of Memphis, Tenn., showed the biggest slowdowns. Home prices in those markets dropped more than 10% from three months ago. The worst performing markets continued to be Tucson and Phoenix, Atlanta and Las Vegas remained the worst performing markets with an average 44% REO saturation rate. With the recent foreclosure suspensions, Clear Capital expects REO saturation to actually drift lower over the next few months. But the lack of demand will prevent any major cuts into the REO inventory. "The recent halt of foreclosures by the top mortgage servicers will certainly help to slow the rate of new distressed inventory on the market, but any positive effect this will have on the market will be countered by the traditional winter slowdown that seems to be starting early this year," Villacorta said. Write to Jon Prior.