If you’re looking for a bottom in the California home price free-fall, keep looking. Standard and Poor’s released its monthly index 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 IndexHome Price Index

The news of tumbling home prices comes on top of dismal reports 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 HousingCA Residential Housing

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