Dec. 26 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in October by the most in at least six years, a private survey showed today.The really bad thing about this report is not the 4.9% drop, but the fact that prices have been dropping every month this year. It all adds up.
Property values fell 6.1 percent from October 2006, more than forecast, after dropping 4.9 percent in September, according to the S&P/Case-Shiller home-price index. The decrease was the biggest since the group started keeping year-over-year records in 2001. The index has fallen every month this year.
Put simply, rising house prices in the US increased domestic consumption while also increasing debt. A long term decline leads to less consumption and more people paying back debt (those who can afford it). Thus we have a recipe for a recession.
But then again you already knew that.
And, in related news, the US Dollar is down again, Oil Prices are up again and US Oil inventories have declined for the sixth straight week.
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