Home prices prompt ‘second dip’ fears

Home prices rose slightly in October, according to a new market survey, but gains are clouded by fear that prices could fall again.

Prices declined by 6.4 percent in October compared to the previous year in the 10-city survey by the Standard & Poor’s Case-Shiller index released on Tuesday. In the group’s 20-city survey, prices fell by 7.3 percent.

But all 20 metro areas surveyed showed an improvement in their annual rates of decline in October as compared to September. That continues a trend in which the housing price decline has slowed markedly since prices crashed at a much higher rate in 2007 and 2008.

Still, David Blitzer, the chairman of the index, described October’s numbers as “flat” since the improvement between September and October was much smaller than in previous months.

“Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip,” Blitzer said in a release.

On the bright side, he noted that sales of existing homes have been strong in recent months, which has allowed the market to work off a huge inventory of homes for sale. However, housing starts remain weak, and fears that the market will be swamped by a new wave of foreclosures remain, according to Blitzer.

Government programs propping up the housing market, including a tax credit that was renewed and expanded by Congress late last fall, are also expected to expire in the first half of 2010.

The housing numbers will be watched closely by the Obama administration and members of Congress, particularly with the midterm elections in 2010 at the forefront of minds.

Congress is expected to move a jobs bill soon after returning to Washington in the hopes of stemming unemployment, which stands at 10 percent. High unemployment has exacerbated the rate of foreclosures in the nation.

In a troubling note for Senate Majority Leader Harry ReidHarry Mason ReidMcConnell not yet ready to change rules for Trump nominees The Hill's Morning Report — Sponsored by CVS Health — Trump’s love-hate relationship with the Senate Trump to press GOP on changing Senate rules MORE (D-Nev.), the Las Vegas metro area remains among the worst-performing areas in the country.

“Las Vegas remains the one market that has not seen a glimmer of hope so far this year,” the Case-Shiller index stated. Prices in the area have declined for 38 consecutive months with a peak-to-trough reading of 55.4 percent. Average prices are barely 5 percent above their January 2000 levels, according to Case-Shiller.

Reid is up for reelection in 2010 and is a major target for Republicans.