October home prices fall across USA: 14 metro areas set records

— -- Home prices in several major cities plummeted at the fastest annual rate on record as mounting unemployment and a rapid pace of foreclosures hampered a turnaround in the beleaguered housing market.

Fourteen out of 20 metro areas showed record rates of annual declines, and 14 now report home-price declines in the double digits compared with October 2007. Overall, home prices in 20 urban areas tracked by the S&P/Case-Shiller index showed an annual decline over last year of 18%, based on a report issued Tuesday.

Atlanta, Seattle, Chicago, Los Angeles, Las Vegas, San Diego, Tampa, Detroit and Portland, Ore., all saw double-digit year-over-year declines in housing prices.

The continued drop in home values can be attributed to several factors. Among them:

•Tight credit. While interest rates on home loans are at record lows, credit standards remain high and that has made it harder for potential buyers to borrow, says Ira Peppercorn, former deputy housing commissioner for President Clinton. The average rate on a 30-year, fixed loan dropped to about 5.04% for the week ended Dec. 19, from as high as 6.44% for the week ended Aug. 22, according to the Mortgage Bankers Association.

The Federal Reserve and the Treasury Department have pumped money into the credit markets to unlock lending, but the consumer lending market remains tight.

The difficulty of getting a home loan has led to a large inventory of unsold homes, which continues to drive down home prices.

•Job losses. Concerns about job security and rising unemployment — at 6.7% in November — have made more buyers skittish about taking on a mortgage. And those who have lost their jobs often are unable to keep their homes, so they're putting them on the market, says ZipRealty CEO Pat Lashinsky.

Most economists expect the downturn to persist well into the new year, increasing pressure on President-elect Barack Obama to take quick action to curb the housing meltdown. Obama has not laid down a specific housing stimulus plan but has backed options such as a 10% universal federal mortgage tax credit to provide relief to homeowners who do not itemize. This credit would provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 a year, according to the Obama administration.