A closely watched housing index shows home prices fell by the steepest rate ever in May, as the housing slump continued to deepen in the U.S.
The Standard & Poor's/Case-Shiller 20-city index, released Tuesday, is off 15.8% for May compared with a year ago, a record decline since its inception in 2000. The narrower 10-city index has fallen 16.9%, its biggest decline in its 21-year history.
No city in the Case-Shiller 20-city index saw price gains in May, the second straight month that's happened. The monthly indices have not recorded an overall home price increase in any month since August 2006.
What continues to happen is a by product of a market that was built on loans done with little or no money down to one being quickly transformed to a market with a minimum of 20% down. This is the direction that Fannie/Freddie are quickly heading toward. On top of this, mortgage insurance providers have faced their own crisis for quite some time though their problems haven't received as much media attention.
Right now, FHA continues to be the only outlet for loans with little or no money down. It's unclear how long that will last. What is clear is that this crisis is nowhere near the end and it will get significantly more bloody than it has. Keep in mind this is a crisis up to four years in the making. Prices have been falling for just less than a year. I don't know how much longer it will go but I have no doubt we are nowhere near the end.