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Home Prices Fall at Record Levels

Published 09/24/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

Home prices fell 9.5 percent from the previous year in Aug., marking the largest recorded drop in history, according to the National Association of Realtors. It had been 11 years since the average price of homes fell on a year-to-year basis.

In July, the average price of a home was $224,400, with the 9.5 percent drop in Aug. the average price of a home decreased to $203,100.

Prices are being driven down by high inventories and a lack of potential buyers due to tightening credit standards and an extremely soft job market that saw employment rolls fall for eight consecutive months. Sales for Aug. are down 10.7 percent compared with the same period a year ago.

Currently, there is a 10.4 month supply of houses on the market. What’s more, median home prices have fallen $21,300 in the past year and $9,300 in the past month.

The depreciating value of homes has the potential to put many families on the edge of ruin. With household savings at an all-time low, many Americans rely on the value of their homes to obtain lines of credit. With home values plummeting, and many Americans owing more than the worth of their homes, Americans may be put behind the financial eight-ball.

Source Bloomberg News:

When the annual rate of change rises to 9.5% from 7.1%, that's bad. But look at it another way, and it's much worse. Over the past year, the median house price has fallen by $21,300. And over the past month, the median house price has fallen by $9,300. Which means that 44% of the drop in house prices over the past year took place in the last month.

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