Home prices continue to drop

Newly constructed homes at a housing development in Novato, Calif.

STACEY VANEK SMITH: More bad news from the housing market, Home prices fell in February for the eighth straight month, according to the S&P Case/Shiller index. Average home prices across the country are now down to where they were nearly a decade ago.

Here to dig into the numbers with us is Karl Case, co-founder of the Case/Shiller Index. Good morning, Karl.

KARL CASE: Good morning.

SMITH: We've heard that housing could be in a double-dip. But with numbers like these are we potentially even in a housing depression?

CASE: Not yet. I mean I think that there is one aspect to it that is the depression. That's the amount of housing production that's taking place. It went below the 50-year-low level. That's a depression for the housing sector. It's been down 30 months at low levels, and it's because the demand is not there. Household formation has dropped. In fact the latest figures from the census say we're not growing households at all. It's not looking great.

SMITH: A lot of the rest of the economy has been recovering and looking pretty robust. So why is it that housing continues to lag behind?

CASE: That's because we had a massive excess. We built a couple of million more homes than we needed, given the number of households, we took prices in some cities and tripled them. Hundred-and-fifty thousand dollar houses in 2000 became $450,000 houses by 2005. So, we have a big hangover. And we're waking up in the morning and it's going to take a while to burn it off.

SMITH: Karl Case is the co-founder of the Case/Shiller Housing Prices Index. Karl thank you.

CASE: OK.

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