Home prices in Cleveland and seven other major markets have sunk to a new low, according to newly released stats

NEW YORK — The housing market started off the new year with a thud.
Home prices dropped for the fifth consecutive month in January, reaching
their lowest point since the end of 2002.

The average home sold in that month lost 0.8% of its value, compared
with a month earlier, and prices were down 3.8% from 12 months earlier,
according to the S&P;/Case-Shiller home price index of 20 major
markets.

Home prices have fallen a whopping 34.4% from the peak set in July, 2006.

“Despite some positive economic signs, home prices continued to
drop,” said David Blitzer, spokesman for S&P.; “Eight cities —
Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and
Tampa — made new lows.”

Only three of the 20 index cities registered gains in January, led by
Phoenix, which climbed 0.9% month-over-month, Washington, up 0.7%, and
Miami, which edged 0.6% higher.

Housing market indicators have sent confusing signals so far this
year, with existing home sales and new home sales down month-over-month
in February, but up year-over-year.

Potential homebuyers lack confidence in the market, according to
Michael Feder, CEO of Radar Logic, an analytics company that produces
daily spot prices for real estate. A big problem looming is a massive
number of potential foreclosures.

“People see that there are millions of homes underwater, and at
elevated risk of foreclosure, and conclude that housing values are
unlikely to appreciate in any meaningful way for many years,” he said.

On the other hand, home builders have turned more bullish and are
gearing up for more new construction. Mortgage rates are also still very
favorable and the economy is getting better with hiring on the rise.

Ken H. Johnson, a real estate professor at Florida International
University, thinks all these factors are helping the housing market turn
around, but the recovery will take time.

“The housing market is like a large cruise ship that turns slowly,
often temporarily loosing ground due to currents and change in
momentum,” he said. “While the ship is turning, drags on the housing
market are also present and must be addressed before a full recovery is
accomplished.”

Despite the market turmoil, home ownership is still the goal of most
Americans, according to a survey released Tuesday by Fannie Mae.

It found that while financial constraints and employment concerns are
keeping homebuyers on the sidelines right now, two-thirds of renters
say they intend to buy someday.

“Some Americans may not be financially positioned to own a home in
the near future,” said Doug Duncan, chief economist for Fannie Mae.

“But they may begin to revisit that aspiration as employment and
household balance sheets improve over the coming years,” he said.