Home prices drop in October

According to the Clear Capital Home Data Index, October marked the 13th straight month of year-over-year home price declines, as nationwide prices fell 2.8 percent. However, compared to quarter home prices showed a 0.6 percent growth for the three months ending in October, and three of four regions in the United States reported slight quarterly gains as well.

Dr. Alex Villacorta, director of research and analytics at Clear Capital, said the price gains in October were modest, as short-term gains were eliminated and long-term performance measures point to negative growth through the start of 2012. Villacorta expects weak consumer confidence and a high distressed property inventory will push down demand through winter.

Smart Money reported that another factor driving down home sales is appraisals. The appraisal process has created new requirements that are resulting in more canceled and delayed contracts for sellers. After an appraisal is given, many potential buyers hold off on buying the home or try to renegotiated the already depressed price based on the results of the house review.

Mortgage lenders are requiring appraisers to conduct a more thorough review of the home, thus providing buyers with more information to use as leverage in negotiations. Lenders are expecting appraisers to reach very high quotas, forcing many to appraise and use properties that are not similar, some even foreclosed or distressed. This manipulates the results, the news source reported.

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