Home Prices Little Changed

Home prices have started to tread water. The Case-Shiller Index, one of the most-quoted measures of the housing boom and bust, barely moved in October compared to September.

That's good news considering that last winter, from October through March, the 20-city index fell more than 2 percent a month. Stability is a huge improvement compared to chaos and confusion. But the improvement in home prices over the last six months - peaking with increases of more than 1 percent in July and August - still leaves millions of home owners owing more to their mortgage lenders than their homes are currently worth.

These millions of vulnerable homeowners are the anvil hanging over the head of the housing market.
Some economists estimate that one in every four homeowners owes more to the bank that their home could now sell for. For those that have lost jobs or are struggling to make mortgage payments, the diminished value of their home could make them vulnerable to foreclosure - and a wave of millions of foreclosures is what started this whole mess.

The Case-Shiller Index of home prices in 20 of the largest metro areas fell to 146.58 in October from 146.65 in September - the numbers are so close as to be effectively the same. In percentage terms, the 0.05 percent drop is the tiniest change in the 20-city index going back to 2000. Even if you take cold weather into account, the index is still flat - rising just about a third of a percentage point to 145.36 in the seasonally adjusted Case-Shiller Index. The closely-watched index is about 30 percent below its April 2006 peak.

The analysts that create the Case-Shiller Index get their numbers by tracking the changes in price of existing homes that have sold and then sold again in 20 of the biggest U.S. metro areas. Its methodology and its focus on large metro areas makes Case Shiller especially sensitive to housing booms and housing busts.

So if Case-Shiller says the market is flat, it must be really flat.
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