Evidence is building fast that home prices are falling into deepening contraction, the likely result of distressed sales tied to foreclosures. Case-Shiller data for September show a very heavy 0.6 percent monthly decline for the both adjusted and unadjusted 20-city indexes. These are three-month averages which indicate an especially severe decline for September alone. In a mild offset, contraction in year-on-year rates moderated slightly to minus 3.6 percent, again for both the adjusted and unadjusted 20-city indexes.
Home prices in Atlanta appear to be plunging, down a monthly adjusted 4.1 percent in September -- again, this is not a year-on-year reading. The decline follows monthly drops in Atlanta of 3.0 percent in August and 1.1 percent in July. Atlanta, together with Phoenix and Las Vegas, are posting new crisis lows though the report is confident that for the nation as a whole, the price collapse of 2007 through 2009 will not be repeated.
Falling home prices are a heavy load on home owners, preventing some from selling their homes and forcing some into financial distress. One upside, as seen in recent data on new and existing homes, is that lower prices, together with extremely low interest rates, are giving a very welcome boost to sales. At 10:00 a.m. ET this morning, the Federal Housing Financing Agency will post its home-price data.