According to the Core Logic Home Price Index, newly released figures for January 2011 show that the prices for US residential homes fell for the sixth month in a row, and are now worth 5.7% less than they were this time last year.
The fall seems to be linked to the high number of foreclosures affecting the market, as well as a weak demand. Negative equity is just one of a number of obstacles in the way of market recovery at this time.
Despite this disappointing news, Mark Fleming, chief economist for Core Logic, said that he hopes a renewed demand in the spring will be able to curtail the downward spiral.
Core Logic’s figures take into account the 20 markets of the Standard & Poor’s/Case Shiller index. 18 of these markets saw residential property prices drop in the first month of 2011. The largest declines were in the Detroit metropolitan area, at 13%.
The worst performing states include Alabama, with prices dropping by 12.1% and Arizona which saw a decline of 11%.
However, it wasn’t all doom and gloom, as several states did see an increase in residential property prices. West Virginia (5.5%), North Dakota (3.3%) and New York (1.9%) all saw increases in the cost of an average residential home.
Another piece of good news is that foreclosure activity, while still quite high, is slowing down, at least according to Foreclosure Radar’s latest figures. Their latest report showed that the number of foreclosure sales to banks dropped by 48.4% in February from January’s level, while foreclosure sales to third parties also dropped, by 35.3%.
It’s hoped that the decrease in the number of foreclosures will continue. Combined with the expected increased activity as the spring buying season swings into action, industry observers are indeed anticipating a recovery of sorts and an end to the decline in residential housing prices.