Why House Prices Will Keep Falling

Tuesday's release of the monthly Case-Shiller U.S. house price index shows a 3.1% year-over-year decline for January. The index of 20 big U.S. cities fell to 140, just a point and change above its spring 2009 low in the wake of the financial meltdown.

The "dismal" showing included 11 cities hitting postbubble lows and "no real hope in sight for the near future," according to S&P's David Blitzer. Robert Shiller, the Yale professor who started the index along with Karl Case of Wellesley, said this month that  "there's a substantial risk of home prices falling another 15%, 20% or 25%."

The latest declines have some wags declaring now the time to buy a house. They see a recovering economy boosting incomes, the collapse of the homebuilding industry trimming oversupply and low interest rates making property more affordable than ever.

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