The Associated Press | Posted: Wednesday, November 26, 2008 11:00 pm
SALT LAKE CITY -- Utah home prices fell 1.6 percent in the third quarter of this year, compared with the same period last year, according to a federal report.
Utah isn't alone -- prices fell in 41 states in the third quarter of 2008, according to figures from the Federal Housing Finance Agency. Nationwide, home values dropped 4 percent.
In Utah, four of the state's five most-populated areas ranked 111 or below among the 292 metropolitan areas nationwide that were ranked for home-price appreciation.
The lone bright spot for Utah is Logan, which ranked 8th nationally as its home prices appreciated 4.5 percent.
Even some of the state's hottest markets are cooling. In and around St. George, home prices rose 73 percent between March 2003 and March 2008. But home prices fell 8.5 percent in the third quarter of 2008 compared to the same period last year. The area now ranks 235th among those on the national index.
Salt Lake City -- now ranked at 157 -- saw a 1.8 percent drop over last year.
Cyrus Thorpe and his wife figured last summer they could have sold their home near downtown Salt Lake City for $175,000. But, with the economic crunch, they listed it at $164,000 several weeks ago.
"Nobody looked at it," Thorpe told The Associated Press. "When we dropped the price to $151,000, we had three people look at it and we got one offer."
Prices in the Provo and Orem areas fell about 3 percent. Home prices in the Ogden-Clearfield area dropped less than half a percent. The housing agency's seasonally adjusted, purchase-only house price index is based on data from repeat home sales.
Across the nation, sales of new homes fell in October to the lowest point in nearly 18 years while the median price of a new home dropped to the lowest level since 2004.
The Commerce Department reported Wednesday that new home sales decreased 5.3 percent last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991, another period when the country was undergoing a steep housing downturn.
The median price of a new home sold in October fell to $218,000, down 7 percent from a year ago. It was the lowest median sales price since September 2004.
The drop in new home sales was bigger than analysts had expected and left sales 40.1 percent below where they were a year ago.
The disappointing performance for both new and existing homes showed that the country is still in the grips of a severe housing downturn.
The problems in housing have sent shockwaves through the entire economy as mounting mortgage foreclosures have cost banks billions of dollars in loan losses, creating the worst financial crisis to hit the country in seven decades.
The bad news on new home sales follows other reports this week that paint a bleak picture of the housing industry.
On Tuesday, a report on home prices and downbeat earnings results from homebuilder D.R. Horton showed further deterioration in the housing market. The Standard & Poor's/Case-Shiller U.S. National Home Price Index said home prices tumbled a record 16.6 percent during the third quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.
President-elect Barack Obama has said Congress should begin working on a sizable stimulus program even before he is sworn in on Jan. 20, with the goal of creating 2.5 million jobs over the next two years to keep the economy from falling into a prolonged recession. The housing industry also is appealing for help from the new administration. The report on new home sales showed sales were down 18 percent in the West and 6 percent in the South.
Sales posted a 22.6 percent increase in the Northeast and were up 6 percent in the Midwest. The drop in sales pushed the inventory of unsold homes up to 11.1 months, meaning it would take that long to exhaust the stock of unsold homes at the October sales pace.
Builders, who have been slashing production in an effort to get control of inventories, are being faced with soaring mortgage defaults which are dumping more unsold homes on a glutted market.
The National Association of Home Builders reported last week that its survey of builder confidence fell to an all-time low of 9 in November, down from 14 last month. Index readings higher than 50 indicate positive sentiment about the market. But the trade group's index has drifted below 50 since May 2006 and below 20 since April.
The housing slump already has cost the country 3 million jobs in construction and related industries, and the home builders are urging Congress to help with increased support for the industry.
Tighter lending standards, rising defaults and fear about the housing market's future have sidelined buyers, an absence felt acutely by homebuilders such as Pulte Homes Inc. and Centex Corp.