U.S. home prices dropped last quarter for the first time in almost 16 years, as 13 out of 20 cities, including Denver, reported declines in March.
The value of a house dropped 1.4 percent in the first three months of the year from the same period in 2006, according to a national report Tuesday by S&P/Case-Shiller. Prices last fell during the third quarter of 1991.
Home prices in metro Denver fell 2 percent in the first quarter over the same period, the index showed. The decline was the eighth-largest among the 20 areas tracked.
The retreat may deter owners from tapping into home equity for extra cash, economists said. Combined with record gasoline prices, lower home prices raise concerns that consumer spending, which accounts for more than two-thirds of the economy, will slow.
“We don’t see a big rebound in economic growth,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis.
Even so, an index of consumer confidence rose to 108 this month from a revised 106.3 in April, a five-month low, the New York-based Conference Board reported Tuesday. The private research group’s index averaged 105.9 last year.
The decline in prices may not be large enough to concern the majority of homeowners, economists said. The drop in prices in the 12 months ended in March pales in comparison with the 157 percent gain over the previous 15 years.
Sellers are reducing prices to lure buyers as the supply of properties on the real-estate market grows. Rising foreclosures as subprime borrowers default on loans may add to the glut of unsold homes, delaying a recovery from the housing slump, economists said.
“The bottom line is, there are just too many homes on the market,” said Christopher Low, chief economist at FTN Financial in New York. “The pressure on prices is not going to ease any time soon.”
Declines in home prices in 20 U.S. metropolitan areas accelerated in the 12 months ended in March, the report also showed.
Denver Post staff writer Aldo Svaldi contributed to this report.
