Buried a bit in the new Case-Shiller data on home prices for August were several markets that still have not recovered much from the housing wreck triggered by the recession. The overall increase, the research firm reported, was an improvement of 0.9% in August over July by the measurement of both the 10 largest and 20 largest markets.

The most troubled large market of all, Las Vegas, remains deeply hurt because of high unemployment and an inventory of unsold homes that is too large for a real recovery to take hold. But other struggling markets have stubbornly failed to improve. The single factor blocking improvements in these markets is probably employment levels, which shows once again that real estate is a very local problem, and only partially a national one, as the U.S. housing market appears to recover.

The year-over-year improvement for Las Vegas was only 0.9%. But, in September:

The Greater Las Vegas Association of Realtors reported 3,076 single-family home sales in August, a 17 percent decrease from the same month a year ago.

The problem should be no surprise. Las Vegas posted an unemployment rate of 11.5% in September. The rate will remain high until the gambling industry recovers. At this point, there is no reason to believe there will be a strong rebound soon.

The August year-over-year price drop in the New York market was 2.3%. While the problem is not as severe as the one in Las Vegas, the critical financial services industry still struggles from the global credit meltdown, and banks and investment houses continue to trim jobs, affecting particularly the high end of the housing market. A point that does not get much attention is that unemployment in the largest city in the United States remains well above the national average at 8.5%. Few economists would argue that joblessness and home prices are intertwined.

Unemployment in the Chicago area is also above the national average, at a level of 8%. Case-Shiller data show that Chicago homes sales dropped 1.6% year-over-year.

National averages for unemployment and home prices receive more attention than local ones. That is unfortunate. National markets cannot entirely recover while some of the largest cities continue to lag behind.

Douglas A. McIntyre

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