Further slump in US house prices

Housing report shows record falls in several key US cities as crisis continues.

    US homeowners have been hit hard by the housing crisis [EPA]

    The crisis has in turn added to the US's economic woes, as the nation experiences a severe economic downturn partly sparked by the housing crisis, along with tight credit conditions and rocketing global oil and food prices.

    The news comes as George Bush, the US president, is to give a speech on the
    economy later on Monday.

    Record declines

    No city in the 20-city index experienced price gains in May for the second straight month.

    The monthly indices have not recorded an overall home price increase in any month since August 2006.

    The index found that nine major US cities - Las Vegas, Miami, Phoenix, Los Angeles, San Diego, San Francisco, Seattle, Portland, and Washington DC posted record declines in May.

    Meanwhile, the value of housing in Detroit is now lower than it was in 2000.

    Las Vegas recorded the worst drop, with prices plunging 28.4 per cent and  Miami second with a drop of 28.3 per cent.

    Parts of the US states of California, Florida, Nevada and Ohio have been particularly badly hit by the lengthy US housing slump, especially neighbourhoods targeted for large construction projects.

    However, the survey also showed that home prices in seven cities, Atlanta, Boston, Charlotte, Dallas, Denver, Minneapolis, and Portland, displayed monthly increases in May compared with April.

    "House prices will continue to drop because inventories of unsold homes remain high," Patrick Newport, an economist at Global Insight, told AP.

    "Recent progress on reducing inventories has been modest. This is bad news because inventories need to come down considerably for the housing market to equilibrate."

    In other news, US consumer confidence rose slightly in July after a six-month slide, with the US Conference Board revealing its overall monthly measure of consumers' mood rose to 51.9 this month from 51 in June.

    Last month's reading was the lowest in 16 years.

    SOURCE: Agencies


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