Home Prices Hit New Lows

The housing market finishes off 2011 on a sour note.

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The latest home price data has disappointed again, confirming what we already knew about the housing market in 2011 and what we can expect in 2012: Housing had a miserable run last year and prices haven't "bottomed out" yet, but 2012 will probably be (a little) better.

Falling for the fourth month in a row in December, home prices were down 4 percent nationally from a year ago, according to the Case-Shiller Home Price Index, pushing all three S&P home price indexes—10-city, 20-city, and national—to their lowest levels since the housing crisis began in 2006. Nationally, home prices are still almost 34 percent off the 2006 peak.

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"While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended," said David Blitzer, chairman of the S&P index committee in a statement. "The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything, it looks like we might have re-entered a period of decline as we begin 2012."

Of the largest 20 metropolitan areas tracked by S&P, only Phoenix and Miami saw modest price increases—just 0.8 percent and 0.2 percent respectively—over last month's numbers. Atlanta posted the lowest figure, with home values dropping almost 13 percent from last year.

But others aren't so sure dropping home values necessarily means doom and gloom for the housing market in 2012, especially with more encouraging sales data in January and February, and signs that builders are starting to feel more confident.

[Read: Pending Home Sales: Prelude to a Healthy Housing Market?]

"It's likely that a robust buying season in 2012 is emerging, fueled by low home values, low financing rates, and an improving economy," said Stan Humphries, chief economist at real estate website Zillow, in an E-mail.

Still, the foreclosure issue will remain a big one in 2012, Humphries warns, and is the primary reason home values are likely to continue to decline. "With so many of these sales being foreclosures, we're still going to see some modest declines in home values nationally for the full year," Humphries added.

But while home value declines are probably here to stay for at least part of 2012, he says the magnitude of declines should taper off if the economy continues to strengthen, a shred of better news for homeowners.

mhandley@usnews.com

Twitter: @mmhandley

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