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Jul 22

Post-bust price lows predicted ahead

Home prices in May dropped 5.9% from the year before but gained 1.2% from the previous month. The annual drop is the steepest since September 2009 and barely offsets the declines seen earlier in the year.

Spring price uptick??

“Home prices usually increase in the spring due to seasonal factors, and the bulk of the gains typically occur by May,” Radar Logic said. “The lackluster performance of the RPX Composite Price to date means that we are almost assured to see new post-bust lows in the fall, when seasonal strength comes to an end and softening demand pulls housing prices downward.”

Because of the new lows, analysts at the firm predicted more homeowners will become underwater on their mortgage than the already 10.9 million and thus more foreclosures are bound to occur.

Largest decline in Seattle

The largest declines in May came in cities in the West and Midwest. Prices fell 14.7% in Seattle, followed by 11.9% in Sacramento, Calif., and 11.6% in Milwaukee. The smallest dip came in New York, at 0.4%, followed by a 1.1% drop in Charlotte, N.C., and a 4.6% decline in Washington.

A meaningful recovery in house prices and owner-occupied demand cannot occur while first-time and repeat buyers are sidelined by rising down payment requirements and widespread negative equity,” reports Capital Economics.

Data from analytics firm Radar Logic, RPX Composite Price covering 25 MSA (metropolitan statistical areas)

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