Home prices fall to lowest level since 2006

By Peter Schroeder - 02/28/12 10:44 AM ET

Home prices wrapped up 2011 at their lowest level since the sub-prime mortgage bubble burst in 2006, according to new data released Tuesday.

Home prices nationally fell 3.8 percent in the last quarter of 2011, and were down 4 percent versus the same time in 2010, according to the Standard & Poor's/Case-Shiller Home Price Index. Prices nationwide have fallen 33.8 percent from the prior peak in the middle of 2006.

The continued slide indicates that while the drop in home prices might be slowing, the struggling market still hasn't hit bottom. The data is particularly disappointing after losses began to slow in the middle of the year and some cities actually began to see prices climb, suggesting the market, thought to be key to the economic recovery, might be regaining its footing.

"In terms of prices, the housing market ended 2011 on a very disappointing note," said David Blitzer, chairman of the index committee. "The past two years has been a story of a housing market that is bottoming out but has not yet stabilized. ... The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything, it looks like we might have re-entered a period of decline."

Eighteen of the 20 cities tracked by the index saw home prices stumble from November to December, with only Miami and Phoenix reporting modest gains. For the year, Atlanta led the way with the steepest fall, as prices dipped 12.8 percent in 2011. Detroit was the only city to actually show home prices climbing during that time, up 0.5 percent.

Atlanta, Las Vegas, Seattle and Tampa all saw their average home prices hit new lows at the end of the year.

Even Washington, D.C., which long was immune to the broader housing downturn and continued to post home price gains, ended the year on a down note. The nation's capital ended the year with prices falling 1.6 percent compared to 2010, dipping 1.2 from November to December.

Part of the downturn can be explained by the typically slow home-buying fall and winter seasons. However, even after the data is seasonally adjusted, it is grimmer than expected. Economists had expected the latest report to show a seasonally adjusted dip of 0.4 percent, but Case-Shiller reported a dip of 0.5 percent.