US house prices plummet as recession deepens

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by Gill Montia

Standard and Poor’s (S&P), the credit rating agency, has published it Case Shiller index of US house prices showing that in October, prices fell at their fastest rate for more than six years.

The index, which is based on the value of existing single-family homes, recorded a decline of 6.7% compared with the same period of 2006. Homes in Miami lost 12% of their value during the month.

Charlotte, Portland and Seattle were the only cities tracked that showed house price rises.

The current US housing recession is the worst the country has seen in 16 years and the latest figures indicate that it is set to continue well into 2008.

Professor Robert Shiller, professor of economics at Yale University and co-founder of the index, says: “No matter how you look at these data, it is obvious that the state of the single-family housing market remains grim.”

The market continues to be depressed by a glut of properties for sale, despite attempts by the US Government to persuade lenders to freeze mortgage repayments in some cases, to keep the level of repossessions down.

The Government has also urged mortgage lenders to tighten their lending criteria, making borrowing more difficult and putting further constraints on the market.

Earlier this month, Fannie Mae, the US mortgage specialist, reported that it expects sales of new homes to fall by around 9% in the coming year.