NEW YORK — Home prices tumbled by the sharpest annual rate on record in the third quarter, according to two widely watched indexes released Tuesday, and the trend is expected to get worse.
The Standard & Poor’s/Case- Shiller U.S. National Home Price Index plunged a record 16.6 percent during the quarter from the same period a year ago. The index measures 20 metropolitan markets’ prices, which are at levels not seen since the first quarter of 2004.
Meanwhile, the Federal Housing Finance Agency — which measures only the price performance of homes with government-backed mortgages — said home values fell a record 6 percent in the third quarter from the year-ago period.
The indexes echo last week’s National Association of Realtors report that showed the median home price fell 9 percent to $200,500 in the July-September quarter.
“The real economy took a sharp turn for the worse toward the end of the third quarter. . . . So as bad as the latest Case-Shiller numbers appear to be, they are bound to get much worse,” Patrick Newport, a U.S. economist at IHS Global Insight, said in a statement.
During the third quarter, the government seized failed lender IndyMac, took over mortgage giants Fannie Mae and Freddie Mac, and poured billions of dollars into flailing companies and the financial system. Several major banks failed or were forced into takeovers.
The National Association of Realtors said Monday the median price for an existing home tumbled by more than 11 percent to $183,300 in October, the largest year-over- year drop going back to 1968.
Karl Case, an economics professor at Wellesley College and co- creator of the Case-Shiller index, said he expects delinquencies and foreclosures to rise as unemployment increases. The nation’s unemployment rate is at 6.5 percent, a 14-year high, and is expected to climb.
“That has yet to hit this report,” Case said.
