USA Today: November home prices fall 5%, expected to fall more

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By Julie Schmit, USA TODAY

U.S. home prices fell 5.1% in November from a year earlier and are expected to go lower as the housing market struggles to find its recovery, according to a report Tuesday.

Real estate analytics firm CoreLogic said that single-family home prices declined for the fourth month in a row and at a faster pace. They dropped 3.4% in October year-over-year.

November declines occurred in 44 states, up from 18 in June when federal tax credits for home buyers were still pumping up sales. Sales and prices fell after the credits expired.

The credits "created the illusion that the market was stronger than it's been," says Patrick Newport, economist at IHS Global Insight. His firm predicts national home prices will fall 5% to 7% more this year before potentially rebounding later in the year.

Rather than draw many new buyers into the market, the credits "just pulled sales forward," says Sam Khater, CoreLogic senior economist. The higher rate of decline in prices in November from October underscores the big challenges the market faces with recovery, he says.

The state of the housing market isn't good news for the overall economy, which is showing improvement. But lower home prices are also not surprising given the expiration of the tax credits, says economist Mark Zandi of Moody's Analytics. The economy avoided a double-dip recession, but "Housing is double dipping," he says. Zandi expects home prices to continue to decline, about 5%, until at least midyear. By the time prices hit bottom, the housing crash will have lasted five years and driven prices 35% off their 2006 peak, he says.

CoreLogic reports November prices did rise in six states: Indiana, Vermont, New York, Wyoming, North Dakota and Maine. Maine led the nation with an 8.6% jump, followed by North Dakota at 4.4%.

In general, states seeing rising prices didn't experience the real estate boom to the extent that other states did, and so they aren't feeling the bust as much, says IHS Global Insight analyst James Diffley.

Market researcher Zillow, which doesn't include foreclosure sales in its data, says November marked the 53rd- consecutive month of declining home values. Zillow's data show national home prices down 5.1% in November from November 2009, resetting to levels last seen in October 2003.

Zillow expects sustained declines until late 2011. Even then, "The bottom will be very long and rocky," says Zillow chief economist Stan Humphries.