Home prices in 20 U.S. cities declined 18.2 percent in November from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank. The decrease in the S&P/Case-Shiller index was in line with forecasts and followed an 18.1 percent drop in October. The gauge started falling in January 2007, and year-over-year records began in 2001. Record foreclosures have contributed to more than $1 trillion in losses worldwide that have prompted banks to shut off access to credit. While plunging values have made homes more affordable, they have also hurt household wealth, contributing to a slump in spending that’s likely to continue for the first half of the year. “The housing market has not yet reached its bottom,” Neal Soss, chief economist at Credit Suisse Holdings in New York, said in an interview on Bloomberg Television. “People have to be in a position where they are not afraid of their most significant asset.” Economists forecast the 20-city index would fall 18.4 percent from a year earlier, according to the median of 27 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 20 percent. Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in November, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas. Broad-Based Drop “The freefall in residential real estate continued through November,” David Blitzer, chairman of the index committee at S&P, said in a statement. “Overall, more than half of the metro areas had record annual declines.” Consumer confidence this month probably held near a record low as Americans fretted about paying their mortgages and keeping their jobs, economists forecast the Conference Board’s sentiment index will show today at 10 a.m. Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s. The 20-city index is down 25 percent from its 2006 peak. Eleven of the 20 metropolitan areas showed record declines in the year ended in November, and eight showed the biggest month-to- month decrease on record. Home prices decreased 2.2 in November from the prior month, matching the October decrease, the report showed. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month. Phoenix and Las Vegas also showed the biggest one-month declines. Other Measures Other housing reports have shown property values continue to weaken as foreclosures climb. The median sales price of existing homes fell 15.3 percent in December from a year earlier, compared with a 13.6 percent annual decline the prior month, the National Association of Realtors said yesterday. Sales of existing homes, which make up about 90 percent of the market, gained 6.5 percent in December from a decade low the prior month, the Realtors group said yesterday. For all of 2008, existing home sales fell 13.1 percent. U.S. foreclosure filings jumped 81 percent last year as more than 2.3 million properties got a default or auction notice, or were seized by lenders, according to RealtyTrac Inc., an Irvine, California-based seller of default data. President Barack Obama has pledged to unveil programs to stem foreclosures and boost housing as he battles the longest recession in a quarter century. The president will also use the second $350 billion outlay from last year’s financial rescue plan to help stem foreclosures, White House press secretary Robert Gibbs said yesterday. Construction Slump Housing starts are down 75 percent from their January 2006 peak. Declining construction has hurt economic growth for the last three years and is likely to weigh further on the economy as the recession extends into 2009. Builders, banks, retailers and manufacturers are all feeling the pinch. Caterpillar Inc., the world’s biggest maker of construction equipment, yesterday announced it was cutting 20,000 jobs as the worldwide building slump hurt sales. “We’re in the midst of a downward spiral and the momentum is building,” Chief Executive Officer Stuart Miller said on a conference call.

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