S&P: Home prices post 16 pct annual drop in July

[October 01, 2008]  NEW YORK (AP) -- A closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, and though the monthly rate of decline is slowing, there is no turnaround in sight.

The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3 percent in July from the year-ago month, the largest drop since its inception in 2000. The 10-city index plunged 17.5 percent, its biggest decline in its 21-year history.

Prices in the 20-city index have plummeted nearly 20 percent since peaking in July 2006. The 10-city index has fallen more than 21 percent since its peak in June 2006.

No city in the Case-Shiller 20-city index saw annual price gains in July -- for the fourth straight month.

However, the pace of monthly declines is slowing, a possible silver lining. Between May and July, for example, home prices fell at a cumulative rate of 2.2 percent -- less than half the cumulative rate experienced between February and April.

But there's "no evidence of a bottom," said David M. Blitzer, chairman of the index committee at S&P.

Las Vegas prices plunged the most at nearly 30 percent, with Phoenix diving 29 percent and Miami, 28 percent. Prices in the seven cities in the Sunbelt all fell between 20 percent and 30 percent from a year ago.

Only seven cities showed positive or flat returns from June to July, down from nine that showed month-over-month gains in June. Atlanta, Boston, Dallas, Denver and Minneapolis all posted positive returns for three months or more.

Though the Case-Shiller is a widely watched gauge of market conditions, the index lags other key housing indicators. August data on new and existing home prices and sales showed the real estate recession is still in full swing.

Last week, the National Association of Realtors said the median sales price of an existing home fell 9.5 percent to $203,100 last month, the largest annual price decline on records dating to 1999. The median home price of a new home fell 5.5 percent to $221,900 in August, the Commerce Department also said last week.

The Case-Shiller numbers have yet to reflect the effects of the recent turmoil in the financial industry. Mortgage rates have been on a roller coaster, and the confidence of homebuyers and sellers has surely been eroded by the record 778-point drop in the Dow Jones industrial average Monday and the government's failed $700 billion Wall Street bailout.

"How many people are going to sit down and say: 'You know honey, it's a good time to buy a house?'" asked Thomas Lawler, a housing economist in Northern Virginia, as stock markets tanked Monday. "The government really needs to get its act together."

[Associated Press; By J.W. ELPHINSTONE]

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