Chicago Sees Nation's Steepest Home Price Drop

S&P Case-Shiller Index Shows Drop Of 0.8 Percent In Chicago, While Homes Gained Value In Many Other Cities

NEW YORK (CBS) ― The housing market rebound may be fading, but there's a bigger concern for Chicago homeowners looking to sell – home prices here are still falling.

In January, home prices in Chicago fell 0.8 percent on a seasonally-adjusted basis among the 20 cities on Standard & Poor's Case-Shiller Home Price Index.

Prices were relatively stable in most of the country in January, except in Southern California, which boasted strong gains. The seasonally-adjusted home prices jumped 1.8 percent in Los Angeles, and 0.9 percent in San Diego.

For the index overall, the news was good. Prices rose 0.3 percent from December to January on a seasonally adjusted basis, and increased in 12 cities in the index.

Many analysts expect the Case-Shiller 20-city index will again turn downward in the coming months as more foreclosures in other states hit the market.

"It is only a matter of time before the index records a double-dip in prices," wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.

The Case-Shiller index measures home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.

The Associated Press contributed to this report.

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