Case-Schiller Index underlines new US housing trend

Prices across the country dropped 0.8pc in September compared with August, the sharpest monthly decline since the spring of last year.
Average prices are now 29pc below the peak they reached in July 2006, though the Case-Schiller Index does show that prices have stabilised in the past 12 months, and are now 0.6pc higher than they were in September in 2009.

Some of September's decline is likely to be down to the ending over the summer of a government scheme that offered incentives of up to $8,000 for people to buy homes.
However, analysts say the market's twin drivers - supply and demand - offer little encouragement at the moment. Chris Low, an economist at FTN Financial, estimates that there are effectively 10 million homes for sale.

The 4 million listed, a further 4 million in which homeowners are either in default or close to it and a further 2 million who would like to sell but are waiting for prices to fall further.
"Supply is first and foremost the big issue," he explains. But banks are doing little to encourage demand as they tighten their lending criteria after the Wild West sub-prime era. 2011 is shaping up to be a critical year.
Having chastised banks for repossessing homes, an increasing number of states are realising that foreclosures may need to be accelerated to help the market find a bottom.
Lancing that boil will not be pretty, especially in those states like Nevada, Florida and California which have seen the most heady boom and busts.

Professor Schiller, the co-creator of the index and an expert on the market, said yesterday that "there's been a cultural change," in attitudes towards the housing market that "goes beyond any short-run forecasts."
He may have been hinting that the painful decline in prices over the last four years is prompting Americans' to question whether the dream of home ownership is all it's cracked up to be.
There's an issue for US politicians, who have aggressively promoted the benefits of homeownership, to tackle that stretches far beyond 2011.
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