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Home prices sink to 2002 levels

(MoneyWatch) After last week's mixed housing news, home prices released today further speculation that a housing recovery is a long way off. According to the latest S&P/Case-Shiller home price index, released Tuesday, home prices fell again in February.

Nationally, home prices are back to where they were in late 2002 for the 20-city composite index, and early 2003 levels for the 10-city composite.

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Home prices fell year-over-year in February in both the 10- and 20-city composites. Prices in the 10-city index fell 3.5 percent, and fell only slightly more -- 3.6 percent -- in the 20-city composite. If there's any upside to the price drop it's that prices fell less year-over-year in February than in January. From January 2011 to January 2012, prices fell 4.1 percent in the 10-city composite and 3.9 percent in the 20-city composite.

"While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirms that, broadly-speaking, home prices continued to decline in the early months of the year," David M. Blitzer, chairman of the index committee at S&P Indices, said in the report Tuesday.

He notes prices in nine MSAs and both composite indices hit new lows in February.

"Atlanta continued its downward spiral, posting its lowest annual rate of decline in the 20-year history of the index at 17.3 percent," Blitzer wrote in the release.

"Phoenix and Atlanta stand out this month in terms of their contrasting relative strength and weakness in the early 2012 housing market. At one of the spectrum, we have Atlanta posting a double-digit and lowest on record, annual rate at 17.3 percent," he said in the report. "Atlanta has now recorded five consecutive months of double-digit negative annual rates and seven consecutive monthly declines."

"On the other hand, Phoenix has posted two consecutive months of positive annual rates, with its latest being 3.3 percent, and five consecutive positive monthly returns."

The good news ends there. Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa reached new year-over-year lows in February, after posting record-low annual home price drops the month before. Atlanta, Cleveland, Detroit and Las Vegas have average home prices below their January 2000 levels.

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Prices in February also fell month-over-month in most cities surveyed. Only three metropolitan statistical areas (MSAs) posted price increases: Phoenix, Miami and San Diego. Phoenix had the highest increase in home prices at 1.2 percent. Miami posted an increase in home prices of 0.6 percent, and prices in San Diego rose 0.2 percent.

News of falling home prices is never good, but it's not surprising. Banks are beginning to move more foreclosures through the pipeline, and those foreclosures put downward pressure on home prices as a whole. Some lenders are more willing to accept short sales, but that still means homes selling at below-market prices.

It's bad news, but hopefully this means we're near the bottom. Home prices fell month-over-month in most MSAs, but prices declined at a slower rate annually in February. The sooner we hit bottom, the faster we'll be able to begin a recovery in earnest.

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