Home prices nationwide declined last month for the first time in more than a decade, raising new concerns about the real estate slump and the damage it might do to the rest of the economy.
The 1.7% decline in the median price of existing homes sold in August was the first year-over-year drop since April 1995, the National Assn. of Realtors said Monday. Also, the number of houses sold fell for a fifth straight month and the supply of unsold homes on the market rose to a record.
The price picture is slightly brighter in Southern California, but home builders, real estate agents and loan brokers here are starting to feel the pain. Los Angeles-based KB Home said last week that new-home orders on the West Coast plunged 58% in the three months ended Aug. 31 compared with a year earlier. Countrywide Financial Corp. of Calabasas, the nation's biggest mortgage lender, warned workers last week to brace for layoffs.
So far, the psychological hit from ebbing home prices is being tempered by rising personal income and by a relatively low unemployment rate of 4.7%, said Stuart Gabriel, head of the USC Lusk Center for Real Estate.