For economic commentary and analysis, go to the Bonddad Blog

From CNN:

Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter a year earlier, according to the report from the National Association of Realtors (NAR). That's the biggest year-over-year drop on record and follows a 1.0 percent year-over-year decline in the third quarter.

In addition, 73 metropolitan areas reported a decline in the fourth quarter, compared to a year earlier. That outpaced the 71 that saw a gain. It was both a record number and percentage of markets showing a decline in the group's quarterly report. Five markets saw prices unchanged.

That decline was a far more widespread than the third quarter, when only 45 markets reported drops and 102 saw gains, or the second quarter when only 26 saw a year-over-year slump in prices. The national median price was still showing a year-over-year gain in the second quarter.

Here's a link to the NAR report.

The drop was widespread. The NE decreased 2.5%, the South decreased 3.7% and the Midwest Decreased 4.2%. The West increased .4%.

Here's more on the figures:

The National Association of Realtors said the states with the biggest declines in sales from October through December compared with the same period in 2005 were: Nevada, down 36.1 percent; Florida, down 30.8 percent; Arizona, down 26.9 percent; and California, down 21.3 percent.

.....

Nationally, sales declined by 10.1 percent in the fourth quarter compared with the same period a year ago. The national median price — the point where half sell for more and half sell for less — fell to $219,300, down 2.7 percent from the fourth quarter of 2005.

In all, median home prices fell in 49 percent of the 149 metropolitan areas surveyed, the largest percentage of areas showing price declines in the 27-year history of the Realtors' price survey.

Let's break these numbers down a bit.

1.) The is the largest price drop on record. That should grab everybody's attention. The housing market is slow acting; economically it's more glacial. For prices to drop 2.7% year over year indicates there are some serious drops going on.

2.) A small majority of markets (73 v 71) saw a decline.

3.) The number of markets with a decline increased 62%. This is not statistical noise. It indicates the problems are spreading out from the hot bed areas and slowly moving into non-bubble areas.

4.) Sales are down 10% year-over-year.

The blog Interest Rate Roundup (a really great econ blog) made the following observations:

The price drops are concentrated in two kinds of areas:

1) Those which experienced the most speculation during the boom and/or which have the most unaffordable homes relative to incomes. That includes large swaths of CA, FL, etc.

and

2) Those with the worst economic fundamentals. Midwest "Rust Belt" cities fall into that category, as do metros exposed to weakness in manufacturing, especially autos. Some examples include cities in Michigan, Indiana, and Ohio.

If it wasn't for Washington, Utah and Oregon, this report would have been much worse.

Earlier yesterday, Greenspan said the worst of housing is over. With figures like this, I don't see how.