The Case-Shiller index is out: Nationwide, home prices fell 19% in January, a record. That’s hardly a shock and there is a bright side: the faster prices fall the sooner we’ll hit bottom (if , like me, you assume there is a bottom), prices will stop falling and sales will rebound. That may take awhile, but we seem to be t=in the middle of a very necessary, if painful, clearing process.
A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously owned homes rose in February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.
“There is still a lot of downward momentum,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We don’t think we’ll see a bottom in home prices until the second half of next year. The decline in home prices will continue to depress household balance sheets.”