Home Prices Post Biggest Drop in 16 Years

Via AP:

• The decline in U.S. home prices accelerated nationwide in July, posting the steepest drop in 16 years, according to the S&P/Case-Shiller home price index released Tuesday.
• Home prices have fallen by more every month since the beginning of the year.
• An index of 10 U.S. cities fell 4.5 percent in July from a year ago. That was the biggest drop since July 1991.
• "The further deceleration in prices is still apparent across the majority of regions," MacroMarkets LLC Chief Economist Robert Shiller said in a statement.
• A broader index of 20 cities fell 3.9 percent in July over last year, with 15 of 20 cities reporting that prices fell.
• The five cities where prices are still rising -- Atlanta, Charlotte, N.C., Dallas, Portland and Seattle -- have reported growth is slowing in the past year. Atlanta and Dallas are close to moving into negative territory, S&P said.
• Shiller, an economist at Yale University, told lawmakers in written comments last week that the loss of a boom mentality among consumers poses a "significant risk" of a recession within the next year.

********
Takeaway: Nothing surprising here. The market has 'discounted' some of this; the question is how much. The bigger point (to me) is what is this doing for consumer confidence. The consumer game is based in large part of psychology so this continued uncertainty and feeling of 'being a little less house rich' each month tends to weigh on consumers. With the sales we are seeing such as Hovnanian's "Deal of the Century" and what I contend will be similar sales from other builders - this will eventually force current homeowners reluctant to drop their price to a point where its market competitive to do so. That should accelerate the price moves downward a bit...