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. Prices 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 U.S. home values declined a record 6 percent in the third quarter from the year-ago period.
Both indexes echo last week's report from the National Association of Realtors that showed the U.S. 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," said Patrick Newport, a U.S. economist at IHS Global Insight, 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 also failed or were forced into takeovers during the period.
But despite these historic efforts, the housing recession appears to be deepening.
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 on records going back to 1968, and the lowest median sales price since March 2004.
Existing home sales fell almost 1 percent from October last year, without adjusting for seasonal factors.
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, further pressuring the housing market.
The nation's unemployment rate is at 6.5 percent, a 14-year high, and is expected to climb higher.
"That has yet to hit this report," Case said.
And already the numbers look grim.
The sharpest monthly drops were in the West. Phoenix posted the largest year-over-year decline of nearly 32 percent in September, the most recent monthly data. Las Vegas dropped 31 percent and San Francisco, nearly 30 percent. Miami, Los Angeles and San Diego all recorded annual decreases above 25 percent.