Housing prices in all twenty major cities measured by the S&P Case-Shiller index fell 1.3 percent from September to October, the latest month on record, according to numbers released yesterday. That's the third monthly drop, and a sign that some economists believe means that we are headed for a double dip in the housing market — that is, a return to where prices were when they hit rock bottom in April 2009. Some expect the prices to go even lower. "This looks like a double-dip [in housing] is pretty much on the way, if not already here," S&P index committee chair David Blitzer told the Journal. "Somebody who thought last year that it's going to be straight up from here was wrong." Robert Shiller, the Yale professor and economist who developed the index, said that economists expected the numbers to be flat and that this news is much worse than anticipated. "If home prices continue on this pace down, I think this economy will have serious reasons to worry," he said, noting that six cities in his index are already selling homes for less than they did before the recession began (Atlanta, Miami, Seattle, Tampa, Charlotte, NC, and Portland, OR). He expects in the coming months more will drop below 2006 levels.
In New York, housing prices dropped at faster than the national rate in October, to 1.6 percent lower than they were in September. Somewhere out there, Nouriel Roubini is doing an I-told-you-so dance, maybe even in the living room of the $5.5 million East Village apartment he bought this month.
This doesn't spell doom for the entire economy — there's good news on the retail front, and manufacturing and exports are expanding. According to the Journal, "Optimism among heads of small businesses and large corporations is also near pre-recession levels." And then there are those stimulative tax cuts that we all will continue to get, along with the yearlong payroll tax holiday. Those signs point to growth. But as far as the average consumer's confidence goes, it's hard to look at anything except housing prices and unemployment — which is at a nineteen-month high at 9.8 percent and could end up looking worse as new numbers are released next week.
Housing Recovery Stalls [WSJ]