Feb. 26 (Bloomberg) — U.S. home prices plummeted at the end of last year and bank seizures of property almost doubled in January, indicating the housing slump is deepening.
Home prices had their biggest fourth-quarter drop since 1991, the Office of Federal Housing Enterprise Oversight said today. The S&P/Case-Shiller home-price index showed prices in 20 metropolitan areas fell in December by the most on record. Repossessions rose 90 percent to 45,327 last month from the same period a year ago, said RealtyTrac Inc., a seller of foreclosure statistics.
“All the news we’re getting is pretty dark,” said Celia Chen, director of housing economics for Moody’s Economy.com in West Chester, Pennsylvania, in an interview. “Prices will continue to fall for the rest of this year because increasing foreclosures in turn increase inventories.”
The worst U.S. housing decline in more than two decades is moving into its third year as buyers find it tougher to get mortgages and foreclosures add to the glut of unsold homes. Banks may resell as many as 1 million repossessed properties this year, forcing prices down even further, said Rick Sharga, RealtyTrac’s executive vice president.
President George W. Bush’s proposal to help 1 million subprime borrowers avoid foreclosure with tax-exempt bonds is doing little to slow the increase in defaults and two interest rate cuts by the Federal Reserve in January have failed to bring mortgage rates down.
Foreclosures Jump
State housing agencies are turning away many applicants because their homes have lost too much value or they’ve accumulated too much debt, according to estimates from Geoffrey Cooper, emerging markets director at a unit of MGIC Investment Co., the country’s biggest mortgage insurer.
Total foreclosure filings in January, which include default and auction notices as well as bank seizures, increased 57 percent, Irvine, California-base RealtyTrac said.
More than 233,000 properties were in default or foreclosure last month. Total filings increased 8 percent in January from December, RealtyTrac said in a statement. More than 1 percent of U.S. households were in some stage of foreclosure during 2007.
Seasonally adjusted prices for existing single-family homes in the quarter fell an average of 1.3 percent from the previous three months, the Washington-based office known as Ofheo said. Prices fell 0.3 percent between the second and third quarters of last year, Ofheo said.