Home, Home I'm Deranged, Part 25

Case Shiller numbers are in for May, and they are just as dismal as predicted.

Home prices in 20 U.S. cities dropped in the year ended May by the most in 18 months, adding to evidence the housing market is struggling.

The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent from May 2010, the group said today in New York. The decline matched the median forecast of 32 economists surveyed by Bloomberg News.

A pipeline of foreclosures and uneven demand will keep prices from rising this year, discouraging new-home construction and delaying a rebound in housing. Shrinking home equity and an unemployment rate at 9.2 percent are weighing on consumer spending, which accounts for about 70 percent of the economy.

“Home prices will remain depressed through most of this year, like the housing sector itself,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Foreclosures are definitely a huge issue. The overhang of unsold homes will take longer to clear as the job market is very soft.” 

The decline is accelerating again.  The housing depression continues unabated.  Should the worst case scenario happen with America's credit rating, the bottom will fall out of the mortgage market and the decline will rapidly pick up speed in its plummet.

Even if it we somehow avoid a downgrade, the housing market will continue to hurt for years.