If you’re looking for a bottom in the California home price free-fall, keep looking. Standard and Poor’s released its monthly index [1] of metro home prices, and the outlook is dismal for Sunbelt states, and for California in particular. The composite year-over-year average of San Francisco, Los Angeles and San Diego prices dropped in August by 27 percent, accelerating a trend that began in December of 2006.

Home Price Index

The news of tumbling home prices comes on top of dismal reports [2] on new housing construction. Residential housing starts remain mired in record low territory, declining 39 percent year-over-year in September, to an annualized rate of just 52,000 units. This is just one-quarter of the residential production rate of the 2003 - 2005 period.

CA Residential Housing

Construction won’t recover until prices hit bottom, and the bottom is still not in sight.