Home Prices in U.S. Fell 5.5% in First Quarter, Biggest Drop in Two Years

Source: Bloomberg

By Kathleen M. Howley

May 25 (Bloomberg) -- U.S. home prices dropped 5.5 percent in the first quarter from a year earlier, the biggest decline in almost two years, as sales of discounted foreclosures undermined real estate values.

Prices fell 2.5 percent from the fourth quarter, the Washington-based Federal Housing Finance Agency said today in a report. Economists projected a 1.2 percent drop from the previous three months, according to the median of five estimates in a Bloomberg survey.

The FHFA’s measure, based on properties with loans backed by mortgage financiers Fannie Mae or Freddie Mac, has fallen for 15 straight quarters as lenders seize homes and sell them at cut-rate prices that drag down overall values. Foreclosures and short sales, in which banks agree to let properties sell for less than their loan balances, have accounted for about 38 percent of transactions this year, based on the monthly average of data from the National Association of Realtors.

“Dumping foreclosures on the market and selling them at distressed prices affects the whole real estate market,” said Richard DeKaser, an economist at Parthenon Group in Boston. “It puts downward pressure on prices, even for homes that aren’t in foreclosure.”

Read more: http://noir.bloomberg.com/apps/news?pid=20601068&sid=aPqx7feE1vIk

of local authorities? If the value of houses goes down in the tank, so does the collection of local taxes that finance the running of municipalities, schools, local vocational colleges, parks, city employees, etc. If that's the agenda, they are playing it to the hilt and hurting local governments immensely.

comes to the housing market.

I see no reason to believe that we are headed for a real recovery. Until that happens, demand will be absent, depressing prices further.

tornadoes are going to wind up putting some pressure on housing in those areas. It's almost like Mother Nature has decided to cure unemployment in the construction sector lately.

but will it? Aren't tornado's an "act of God" and uninsurable, basically?

Also understand that flood damage insurance is very expensive -- think you have

to get it from government?

Interesting post -- !!

conspiracy in order for that to be true. Falling prices are determined by supply/demand. If the supply is much bigger than the demand, as it is right now because they overbuilt and oversold new homes, then people buying a new home get to be very picky in what they buy and at what price. And sellers are up s*** creek without a paddle and if they need to sell or have to sell because they are moving, they slash their prices again and again until finally they find a person willing to buy their home.

Housing prices are not set by some firm at Wall Street or by the government. Housing prices are set by sellers and buyers. Government and Wall street policies can affect this - if there is easy credit, more homes are sold, and if there are high interest rates/no credit, fewer homes are sold, but in order for this to be some huge conspiracy, like I said, every person selling a home and every person buying one, would have to be part of the big conspiracy. Not likely.

big rush to foreclose on everything they possibly could. I stand by my reasoning as most bankers/CEOs are Republicans and have the shrinkage of government as an end goal.

reading a book called "The Big Short" right now and boy is it ever enlightening as to the causes of the housing problem and financial meltdown.

Read it last year. It's the best of the books I've read on the economic crisis/collapse.

That the economy is not going that well.. I hope it doesnt crash again.. that would make it hard for obama..

That would be hard for me, and most everyone I know.
Where I live, the first crash isnt over.
Is it over where you live?

people's incentive to buy or sell

Why would I buy? where is the bottom?
Where are the jobs?

No Jobs No economy

lots of poor

no Middleclass

but then revolutions happen

Banks and brokers and real estate agents all made their money in big piles when the housing market fell. As people ditch their houses, the Banks had all the downpayment $$$$$$ as well as hooked the buyers into paying house payments as if they are renters.
My husband and I may have to bail in the future. we have lost every cent that we saved for a downpayment.

and hope you'll be OK --

!!

in the land-o-propaganda that the U.S. has become.