Home prices in 20 U.S. cities dropped more than forecast in August, highlighting one of the obstacles facing the economic recovery in its third year.
The S&P/Case-Shiller index of property values in 20 cities fell 3.8 percent from August 2010, the group said today in New York. The median forecast of 30 economists surveyed by Bloomberg News was for a 3.5 percent decline.
Recovering the 31 percent plunge in home prices from their 2006 peak will probably be years in the making as foreclosures throw more properties on the market and sales flag. Federal Reserve policy makers like William Dudley are among those that believe bolstering housing is among the “most pressing issues” facing the central bank.
“There is still a big imbalance between demand and supply,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who projected a 3.9 percent decline. “Prices will keep declining into 2012.”
Stock-index futures extended earlier losses after the report. The contract on the Standard & Poor’s 500 Index expiring in December fell 0.4 percent to 1,241.7 at 9:18 a.m. in New York. Treasury securities were little changed.
Estimates in the Bloomberg survey of economists ranged from declines of 3 percent to 4.3 percent. Year-over-year records began in 2001. The group revised the 12-month drop in July to 4.2 percent from a previously estimated 4.1 percent.
