NEW YORK U.S. home prices plunged by a record 8.4 percent in November, marking two years of slowing returns, according to a key index released Tuesday.
The decline in the Standard & Poor's/Case-Shiller 10-city composite home price index was the biggest year-to-year drop since a 6.7 percent decrease in October. The November performance was the 11th straight monthly decline. The index tracks prices of existing single-family homes in 10 metropolitan areas.
The broader 20-city composite index also was down year-over-year, falling 7.7 percent in November.
Robert Shiller, chief economist at MacroMarkets LLC and one of the architects of the index, noted that 14 of the 20 metropolitan areas posted their single largest monthly decline on record in November.
Miami led the pullback with a 15.1 percent decline, followed by San Diego at 13.4 percent, Las Vegas at 13.2 percent and Detroit at 13 percent. Los Angeles, Phoenix and Tampa, Fla., also recorded double-digit declines in November.
Only Charlotte, N.C., Portland, Ore., and Seattle posted positive annual growth rates.
The index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.
It comes a day after the government reported that new home sales plummeted last year by the biggest amount on record. The Commerce Department said Monday that sales of new homes dropped by 26.4 percent last year to 774,000, marking the largest plunge since 1980.
The governmnet also said the median price of a new home edged up only 0.2 percent in 2007 to $246,900, the worst performance since prices slipped by 2.4 percent during the 1991 housing downturn.
After five years of booming home sales and prices, housing stalled at the end of 2005 and turned into a serious slump last year. Homebuilders and lenders have posted huge losses, while Wall Street investors, including major national banks, have taken billion-dollar write-downs on securities backed by mortgages.
The fear has seeped into the broader market, creating a squeeze on all types of credit and curbing consumers' willingness to spend. Economists worry the prolonged housing downturn could plunge the economy into a full-blown recession.
The Federal Reserve has stepped in to stem the fallout by slashing a key interest rate by 1.75 percent since September, including an unexpected emergency three-quarter-point cut to 3.5 percent last week. The central bank begins its two-day meeting Tuesday.
Also last week, President Bush and House leaders agreed on a $150 billion economic stimulus package which included a plan to increase the size of mortgages Fannie Mae and Freddie Mac and the Federal Housing Administration can handle. But critics believe more dramatic action is needed.