The Decline in Home Prices Is Not Over?EUR??,,????'?????<

Housing prices in San Diego (pictured) and Washington, D.C. are on the rise, but were the only two markets of the 20 on the index that didn?EUR??,,????'?????<

U.S. home prices fell 3.9 percent for the last quarter of 2010, about where they were at the beginning of 2003 and near the low in 2009, according to the latest Standard & Poor's/Case-Shiller National Home Price Index.

For all of 2010, home prices fell 4.1 percent. Eighteen of the 20 housing markets tracked lost ground, and 11 reached new lows. Only Washington, D.C. and San Diego housing prices rose.

Markets that "double dipped" to new lows since the peak in 2006 and 2007 are Atlanta; Charlotte; Chicago; Detroit;Las Vegas; Miami; New York; Phoenix; Portland, Ore.; Seattle and Tampa.

This news conflicts with the Conference Board Consumer Confidence Index’s monthly Consumer Confidence Survey, a random sample survey conducted by the Nielsen Co. That survey shows consumer sentiment rose to 70.4 in February, its highest level in three years (data through Feb. 10, 2011).

At odds to this positive consumer indication is Walmart’s fourth quarter report to shareholders on Feb. 22. Wal-Mart, the world’s largest retailer, reported a 1.8 percent fall in “U.S. comparable-store sales” for the fourth quarter, although the company posted a 27 percent rise in quarterly profit!

But back to home prices. They’re expected to decline more, because:

1. There’s a glut of houses on the market. At the current rate of home sales, it would take an estimated seven months to sell all of the new-built houses on the market, and eight months to move all the existing homes for sale. In an “ordinary” market it would only take about six months to sell all of the homes on the market. The excess of homes for sale push prices down.
2. Distressed sales accounted for about half of all home sales in January. Such homes sell at a discount. Nearly five percent of all mortgages are in foreclosure, which matches the all-time high.
3. Interest rates have been rising from the 4.17 percent low of last fall. The rate on the average, 30-year mortgage hit 5 percent in January. A rise in interest rates will keep some renters from buying. However, at this writing, February 23, rates have edged down a bit. The lowest FHA 30-year fixed mortgage rate is at 4.8 percent.
4. The Feds are winding down some of the extraordinary measures and programs to support the housing market. The Obama administration is already recommending lowering the cap on the size of mortgages guaranteed by taxpayers through Fannie Mae and Freddie Mac. Also, the first-time home-buyer tax credit has ended.