Home Prices in U.S. Fell Record 4.5% in Third Quarter (Bob Willis)

Created by : Francis Goodwin View profile

By Bob Willis

Nov. 27 (Bloomberg) -- Home prices in the U.S. fell in the third quarter by the most in at least two decades as the subprime lending crisis caused sales to slump.

Home values retreated 4.5 percent in the three months through September from the same period a year before, the most since records began in 1988, according to a report today by S&P/Case-Shiller. It followed a 3.3 percent drop in the second quarter.

Prices will probably keep sliding as foreclosures force more properties on to the market and sales weaken as mortgages become harder to get. The slump threatens to slow consumer spending as fewer homeowners will be able to afford vacations, new autos or home improvement projects.

``We see this as just the beginning of a downward trend,'' said Michelle Meyer, economist at Lehman Brothers Holdings Inc. in New York, who correctly forecast the quarterly decline. ``Weaker home prices imply a weaker consumer.''