The seasonally adjusted Case-Shiller 20-City index fell 0.7 percent in November, according to the latest indicators and developments in the housing sector. The index, which is in its seventh consecutive month of decline, has now fallen in 17 of the last 18 months. In recent months, the rate of price decline appears to be accelerating modestly, with prices dropping at a 7.9 percent annual rate over the last three months compared to a 3.7 percent decline over the last year.

There is little reason to expect that house prices will stop their decline any time soon. The best path would be a slowing rate of decline with, prices perhaps leveling off by the end of 2012. In several markets, particularly cities on the West Coast, the housing bubbles have not yet fully deflated. Nothing should be done to prevent them from deflating; however, it would be desirable to see prices stabilize and possibly rise somewhat in markets where the bubble has fully deflated and the market is overshooting on the down side.

For a more in-depth analysis, read the latest Housing Market Monitor.

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