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Home prices reached a double dip according to Case-Shiller. “Data through March 2011, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S.National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels,” the firm reported.

The markets hardest hit was Minneapolis, which was down 10% year-over-year in March. Prices were down 7.6% in Chicago, and Portland. Home prices fell 8.4% in Houston and 7.5% in Seattle, according to the Case-Shiller Composite of the 20 largest cities in the US.

The drop is almost certainly not over. The number of mortgages which are underwater is now about 20% of US home loans. These houses cannot be sold without their owners paying their banks at closing. Foreclosed homes sold by banks are nearly a quarter of the inventory in most months. These homes sell for a large discount to non-foreclosed properties.

Foreclosures have dropped a small amount in the last quarter, but this is primarily due to backlogs at financial firms caught in the robo-signing scandal. It is expected that there will be a surge of foreclosures once this issue is resolved. Experts estimate that the shadow inventory held by banks–foreclosed homes which have not come onto the market yet–at between 2 million and 3 million.

Finally, there is the issue of a slowing economy. Goldman Sachs has cut its forecast for US GDP growth twice in the last month. Weekly jobless claims filings have been above 400,000 for over a month, an indication that unemployment improvement has stalled.

Douglas A. McIntyre