American real-estate market hit by sharpest ever annual drop in prices

An end to the American housing recession, something that many observers regard as essential to ending the credit crunch, seemed little closer yesterday, with US real estate prices falling by the sharpest annual rate ever in July, though the monthly rate of decline is slowing.

The Standard & Poor's/Case-Shiller housing index fell by a record 16.3 per cent in July from the level a year ago, the biggest drop since its inception in 2000. The index covers properties across the 20 largest urban centres in the US. Prices in these areas have plummeted almost 20 per cent since peaking in July 2006. A further fall will see a further rise in the losses faced by the banks on subprime property loans and other mortgages.

Even the fact that the pace of monthly declines is slowing gives little cause for optimism. Anna Piretti, of BNP Paribas, commented: "While house price deflation appears to have moderated in recent months, rising housing foreclosures, the huge overhang of unsold properties still available on the market, ongoing financial troubles and additional expected economic weakness should continue to exert substantial downward pressure on house prices well into next year."

There is "no evidence of a bottom", added David M Blitzer, chairman of the index committee at S&P.

As throughout the housing crisis, property in areas such as Las Vegas is faring worst. There prices plunged by almost 30 per cent on the year, with Phoenix, Arizona diving 29 per cent while Miami, Florida, saw a decline of 28 per cent.

Last week, the National Association of Realtors said the median sales price of an existing home fell 9.5 per cent to $203,100 (£114,275) last month, the largest annual price decline on records dating to 1999. The median home price of a new home fell 5.5 per cent to $221,900 in August, the Commerce Department also reported.

Before the most recent banking crises, Americans confidence in the economy unexpectedly improved in September – but it still hovers near a 16-year low. The optimism of the American consumer was buoyed by the tax rebates issued by the American government in an attempt to stimulate the economy, However it remains about half of what it was a year ago, and, like house prices, seems likely to stay depressed as financial turmoil continues and more jobs in the financial and other sectors disappear.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss