Are Home Prices Headed For A 'Double Dip'?

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New data show home prices dipped from September to October. That's led some economists to worry that lagging housing prices are headed for a "double dip" — a second sustained decline in prices.

ROBERT SIEGEL, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.

AUDIE CORNISH, host:

And I'm Audie Cornish.

Two industries took snapshots of their parts of the economy this week, and they give us two very different pictures. Home prices are down, retail sales are up. We'll hear about both.

NPR's Larry Abramson has the story from the real estate side.

LARRY ABRAMSON: There was some hope that housing prices might be on an upward trend earlier this year. But since the federal housing credit expired in April, prices have dipped back downward.

Now a study from Standard & Poor's says that prices in 20 major cities dropped eight-tenths of a percent from September to October.

David Blitzer is with Standard & Poor's.

Dr. DAVID BLITZER (Chairman of the Index Committee, Standard & Poor's): Six of the 20 cities we followed made new lows, and generally speaking, this is a pretty soggy report.

ABRAMSON: Those cities include Atlanta, which saw housing prices drop more than two percentage points from September to October. Tampa, Miami, Charlotte, Seattle and Portland, Oregon hit their lowest levels since the housing crash began in 2006.

According to Richard Green, of the University of Southern California, some places are still haunted by a huge housing glut.

Professor RICHARD GREEN (Director, Lusk Center for Real Estate, USC): Florida just built far, far too many houses and it's going to take a long time to burn off the inventory of them.

ABRAMSON: Despite declines in October, four cities did manage to post gains over the past year - Los Angeles, San Diego, San Francisco and Washington, D.C.

Richard Green says all these cities are blessed by unusual circumstances that are not at all typical.

Prof. GREEN: These are places with constrained development where there has not been a lot of housing construction actually in some time now. And so it makes some sense that they're doing better. And, of course, Washington is a place where the employment picture is much better than the country as a whole.

ABRAMSON: Even in cities where houses are moving, sales are actually driving down prices. Alfredia Spates is a realtor for Real Estate One outside Detroit. She says many of her transactions are so-called short sales - distress sales of expensive homes.

Ms. ALFREDIA SPATES (Realtor, Real Estate One): People start losing their jobs and just can't afford the mortgage. The banks are giving them permission to sell the homes for less than what they owe, which puts the pricing of the home at a much lower price.

ABRAMSON: So those short sales tend to push prices down even further.

This news comes as other indicators are looking up. Some Christmas retail figures show that people are spending again.

But David Blitzer of Standard & Poor's says housing and the rest of the economy might remain on different tracks.

Dr. BLITZER: Buying a house is a little bit different than buying a couple of extra Christmas gifts, or slightly more expensive Christmas gifts.

ABRAMSON: Based on past recessions, economists have been expecting the housing industry to lead the economy back to recovery. That seems unlikely now, as the industry that set off the downturn can't seem to get up off the mat.

Larry Abramson, NPR News, Washington.

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