Housing prices nationally continued their free fall in May, with a leading index showing a record drop of 15.8 percent from May 2007.
The Standard & Poor's Case-Shiller Home Price Index, released yesterday, showed year-over-year declines for all of the 20 cities it tracks, including the first one recorded so far in Charlotte, N.C.
The index has not shown an overall price increase since August 2006.
Philadelphia is not covered by the index. The most recent median sale price for existing homes in the Philadelphia region, recorded in June by Prudential Fox & Roach HomExpert Report and based on data from Trend Multiple Listing Service, showed a year-over-year drop of 0.2 percent.
For the first six months of 2008, the median price for the region dropped just 1.8 percent from January to June 2007, according to HomExpert Report.
Of the 20 cities covered by Case-Shiller, foreclosure-ridden Las Vegas, Miami, Phoenix, Los Angeles, San Diego, San Francisco, and Tampa, Fla., had the steepest price declines.
"The Sun Belt . . . saw the biggest booms and now sees the largest declines," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "The Northeast, including Boston and New York, are cyclical but less volatile, while the Midwest, paced by Detroit and Cleveland, face difficult economies."
Patrick Newport, housing economist at Global Insight Inc., of Lexington, Mass., said housing prices would continue to drop because inventories of unsold homes remained high.
"Recent progress on reducing inventories has been modest," Newport said. "This is bad news because inventories need to come down considerably for the housing market to equilibrate."
Inventories of existing houses are at an all-time high, while the new-home supply has shown a welcome drop, Newport said. With sales falling and foreclosure rates in the Sun Belt still rising, "the excess could remain stubbornly high through the rest of this year."
Seven of the metro areas covered by Case-Shiller showed slight price increases from April to May, which economists consider a positive sign, considering the credit tightening in recent months in reaction to the subprime crisis.
Although some in the industry are hoping that the housing-recovery legislation will boost sales, economists are not so certain.
"In most respects, its specific measures actually offer remarkably small incentives, with complicated features that most homeowners or potential homeowners will likely chose to forgo," said William Wheaton, a Massachusetts Institute of Technology economist. "On the other hand, its bailout and preservation of Fannie [Mae] and Freddie [Mac] are likely to be of historic importance."
Keeping the supply of low-cost mortgage money open "is the one essential feature in a bill filled with many superfluous provisions," Wheaton said.
City 1-yr % drop
Las Vegas -28.4
Los Angeles -24.5
New York -7.9
Portland, Ore. -5.2
San Diego -23.2
San Francisco -22.9
Tampa, Fla. -20.2
20-city average -15.8%
SOURCE: Standard & Poors