Prices of U.S. single-family homes in January plunged a record 19.0 percent from a year earlier, showing a U.S. housing market that is still in the throes of a deep recession, according to a Standard & Poor's/Case-Shiller report on Tuesday.
The composite index of 20 metropolitan areas fell 2.8 percent in January from December, S&P said of the index that dates back to 2000.
The U.S. housing market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.
The drops on a month-over-month as well as year-over-year basis were bigger than expectations based on a Reuters survey of economists.
Michelle Meyer, an economist at Barclays Capital in New York, said the large number of foreclosures were behind the steep home price drops in certain areas.
"Home prices fell on a year-over-year basis in all 20 metro areas surveyed, driven by steep drops in boom-to-bust markets such as Las Vegas, Phoenix and San Francisco," she said.
"Home prices are falling sharply in these markets due to deeply-discounted foreclosed homes, which make up more than half of existing home sales," she said.
S&P said its composite index of 10 metropolitan areas declined 2.5 percent in January from December for a 19.4 percent year-over-year drop, also a record. The 10-city index dates back to 1988.
As of January, average home prices across the United States are at similar levels to late 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2 percent and the 20-City Composite is down 29.1 percent.
Most parts of the country appear to remain on a downward path, with all 20 metro areas reporting annual declines, and nine of them falling more than 20 percent in the last year, David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, said in a statement.
"There are very few bright spots that one can see in the data," he said.
The composite indexes have been reporting consecutive annual record declines since October 2007, while on a month-to-month basis they have shown 30 consecutive months of falls, he said.
The U.S. housing market is critical to the economy, with a wide-ranging impact from the construction industry to the sale of appliances and furniture. After hurting growth for multiple quarters, a continued deterioration could prolong a turnaround for the world's largest economy, which has been in a recession since late 2007.
Economists believe the housing market will not begin to recover until home prices fall far enough to stimulate demand, which has emerged in some states, such as California.
Many potential buyers, however, are opting to stay sidelined, waiting for home prices to stabilize from their downward spiral.
The three worst performing cities, in terms of annual declines, continued to be from the Sun Belt. Phoenix was down 35.0 percent, Las Vegas declined 32.5 percent and San Francisco fell 32.4 percent.
Dallas, Denver and Cleveland fared the best though they too suffered drops, with prices falling 4.9 percent, 5.1 percent and 5.2 percent, respectively.
New York, buoyed by plentiful jobs and big bonuses in the financial sector in recent years, showed a more modest annual decline of 9.6 percent. Home prices in New York, however, are vulnerable, with rampant financial sector layoffs expected to take a toll on real estate.