Image: 'for sale' signs outside homes
Ross D. Franklin  /  AP
Across the country, the signs are clear: a glut of homes for sale and declining valuations are warnings that the country is far from out of its recessionary mood.
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updated 12/19/2010 11:49:13 AM ET 2010-12-19T16:49:13

Not long ago it looked like the housing market was on the mend in most major U.S. metropolitan areas. But now prices are falling fast again in many. Foreclosures and vacant homes lingering on the market are depressing prices, and the home buyer tax credit that expired in July is sorely missed.

In September home prices fell in 18 of the 20 metro areas tracked by Standard & Poor's Case-Shiller composite home price index. That was worse than August, when 15 of the top 20 cities were down month-over-month.

"There is a large supply of houses on the market," says David Blitzer, chair of the index committee at Standard & Poor's. "And further, hidden supply due to delinquent mortgages, pending foreclosures or vacant homes."

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Of America's largest urban housing markets, Cleveland seems to be deteriorating the most. Home prices in Cleveland dropped a frightening 3% in September alone, according to S&P/Case-Shiller, and are now 1.9% lower than they were a year ago. Like much of the rest of Ohio, Cleveland hasn't found replacements for the manufacturing jobs lost over the past decade starting from the 2001 recession. The unemployment rate in Cuyahoga County, which includes Cleveland, was 9.2% in April. These days it's at 9.7%.

Zillow's real estate research unit concurs that home value depreciation began to accelerate again in September across the country; in a new report it projects that U.S. homes will turn out to have declined in value by a total of $1.7 trillion in 2010. Even the biggest cheerleaders for residential real estate are pessimistic. The National Association of Realtors recently predicted that homeowners could expect little, if any, increase in home values nationwide in 2011.

But the statistical warning signals are flashing brighter in some cities than others. For example, in Minneapolis, home prices have retreated for three straight months, most recently declining by 2.1% in September, according to the S&P/Case-Shiller index. The unemployment rate in the Minneapolis area is a pretty decent 6.7%, but it has increased from just 6.1% in May.

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In Portland, Ore., where the economy has performed poorly and private-sector job growth has been tepid, housing prices fell by 1.9% in September and are down 3.6% in the last year. In Dallas, the town's football team isn't the only thing sinking this fall. Home prices in Dallas fell by 1.6% in September after sliding 1.2% in August.

Some cities that not so long ago had reason to believe they were in a housing recovery have turned in the wrong direction. Chicago had a nice run of five straight months of housing prices gains between April and August, but prices slid 1.5% in September, according to the S&P/Case-Shiller survey.

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© 2012 Forbes.com

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