WASHINGTON — Home prices in major areas have reached their lowest level since the housing bubble burst in 2006, driven down by foreclosures, a glut of unsold homes and the reluctance or inability of many to buy.
Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor's/Case-Shiller 20-city index. And prices in a dozen markets have reached their lowest since the housing crisis began.
The nationwide index fell for the eighth straight month. Many economists think prices nationally will drop at least 5 percent more by year's end. They aren't likely to stop falling until the glut of foreclosures for sale is reduced, employers start hiring in greater force, banks ease lending rules and would-be buyers regain confidence that a home purchase is a wise investment.
"Folks are having so much difficulty in getting financing for a home," said Mark Vitner, senior economist at Wells Fargo. "It may be early next year before prices hit bottom."
Another obstacle to a rebound in prices: a delay in processing foreclosures. Homes in foreclosure sell, on average, for 20 percent discounts. When they do, they pull prices down. But many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.
Once those homes are eventually foreclosed upon, they will trigger another price drop in many markets. Those declines are "etched in stone," said Patrick Newport, a U.S. economist at IHS Global Insight.
Roughly 92 percent of homeowners say it's a bad time to sell their home, according to the latest Thomson Reuters-University of Michigan surveys of consumers.
Some of the sharpest declines have occurred in cities hit hardest by unemployment and foreclosures, including Tampa.