Home prices are falling further, suggesting a bottom hasn't been reached in many metro areas.
Millions of foreclosures are expected to pour onto the market in the coming years. That's likely to force prices down and hurt even cities that had begun to rebound. Investigations into banks' foreclosure paperwork could further deter buyers and weigh down prices.
The past few months have been the worst time in a decade for the housing market. Few people have bought homes, and among the small pool of buyers, many have purchased foreclosures and other distressed properties.
The impact was apparent Tuesday when Standard & Poor's/Case-Shiller released its latest index for home prices in 20 major U.S metro areas. The average price for all markets fell 0.2 percent in August and 15 cities posted declines.
But the foreclosure problem is far from over. A "shadow inventory" of homes on the verge of foreclosure is bound to force prices lower well into next year. About 2 million loans are in foreclosure, and another 2.4 million borrowers have missed at least 90 days of mortgage payments, according to LPS Applied Analytics.
"It's like a never-ending supply" of homes, said Daniel Alpert, managing partner at the New York investment bank Westwood Capital. He expects prices to fall another 10 percent over the next year _ and not improve much after that.
Most troubled homeowners are concentrated in cities that have already been battered by the housing bust. One in 15 homeowners in Las Vegas received a foreclosure notice in the first half of the year, according to foreclosure listing service RealtyTrac Inc. In the Fort Myers, Fla. metro area, the ratio was one in 20; in the Phoenix metro area it was one in 23.
"If you're going down the hill, you tend to keep going down the hill," said Mark Fleming, chief economist at real estate data firm CoreLogic.
In Las Vegas, prices have fallen 57 percent from the peak four years ago. They are now at the lowest point since spring 2000. In August, they ticked up slightly _ 0.1 percent _ according to the Case-Shiller report.
Investors buying properties to sell or lease have helped to stabilize the nation's worst housing market. Demand is also coming from retirees, said Paul Bell, a real estate agent with Prudential Americana Group in Las Vegas, who noted that 45 percent of the city's buyers are paying cash
That's "helping to contribute to a floor" in the city's home prices, Bell said.
Some markets are doing relatively well. Chicago, Washington and New York have been showing consistent price increases since spring, though the pace of those increases faded over the summer. In the nation's capital, the large number of federal employees and government contract workers have kept the economy strong. New York has seen fewer foreclosures than other cities.
California may offer the most complex housing picture. Even though the state's major cities have started to show weakness, prices are well above the bottom of spring 2009.
The San Francisco area's home prices have surged more than 21 percent since then. Prices in San Diego have risen nearly 14 percent and had increased for 15 consecutive months before falling in August.
In Los Angeles they have increased by more than 10 percent in that period. Home prices would have to rise by more than 50 percent in each of the markets to return to their peaks during the housing boom.
It's still unclear how the allegations of lenders using flawed documents to foreclosure on homes will affect housing markets. Bank of America and Ally Financial Inc.'s GMAC Mortgage have started processing foreclosures again, after calling a temporary halt while they reviewed mortgage documents.
Some buyers are worried that the sale of a foreclosure could be contested _ or even canceled _ if the previous owner claims the foreclosure was invalid.
In an October survey taken by the National Association of Realtors, about 23 percent of real estate agents said they have a client who is no longer interested in purchasing a foreclosed property due to the foreclosure-document mess.