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Home Prices Fall for Second Consecutive Month in Major Cities

As the 2012 election looms, declining home prices indicate a bumpy road to economic recovery.

By Jonathan P. Hicks

Posted: 12/27/2011 05:45 PM EST

Filed Under Las Vegas, Housing, Barack Obama, Detroit, Economy, Republican Party, Cleveland, Phoenix, National News

The prices of American homes fell for a second consecutive month, a reflection of the shaky nature of the nation’s economic recovery. The numbers paint a spotty picture of economic growth as the nation enters the 2012 election in which the economy is likely to be a central theme.

The Standard & Poor’s/Case-Shiller index indicated that housing prices declined in October from September in 19 of the 20 cities tracked. And economists said that the decline was likely to have been particularly steep in African-American areas in major cities.

The report indicated that home prices are significantly lower in hard-hit areas such as Atlanta, Cleveland, Detroit, Phoenix and Las Vegas. However, the report said that the smallest declines in housing prices were seen in Washington, New York, Los Angeles and San Diego.

The index indicated that home values remain depressed despite the fact that there have been some small gains in the overall housing market in recent months.

David M. Blitzer, chairman of S&P’s index committee, said that there is a significant link between home values and economic recovery.

“Purchasing a home is a substantial financial commitment for the average person,” Blitzer said in an interview with BET.com.

“When prices drop, it reflects a number of factors, such as employment and confidence in the economy,” he added. “On the other hand, if people aren’t buying houses in large-enough numbers, the prices go down. When home prices fall, it’s harder to sell a house and people don’t feel as wealthy.”

The report indicated that continued high unemployment and weak job growth have been factors in creating reluctance among perspective homebuyers. In fact, the low mortgage rates have failed to lift sales.

Some people are unable to qualify for home loans or they are unable to meet higher down payment requirements. On the other hand, some would-be homebuyers with good credit and reliable income are reluctant to enter the housing market because they are afraid that home prices will continue to drop.

The nation’s economic picture is likely to be the major topic in the 2012 election. Republican candidates have maintained that they want the election to serve as a referendum on the economic stewardship of President Barack Obama.