Last week futures contracts and options based on the S&P/Case-Shiller U.S. National Home Price Index with durations of more than 12 months began trading on the Chicago Mercantile Exchange. Based on prices for contracts expiring during the next several years, investors expect deep housing-price declines to continue. Investors expect the 10-city composite index to be down more than 8 percent by September 2008 and more than 10 percent by September 2009 before beginning a slight upturn for 2010 and 2011. The 10 markets on which CME contracts are currently traded are mostly coastal -- except for Chicago, Denver and Las Vegas -- so the composite is likely showing a deeper downturn than would a more national index covering stronger markets like Seattle or Raleigh-Durham. Investors expect th...
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