Tuesday October 27, 02:43 PM
Pace of fall in US home prices eases: index
WASHINGTON (AFP) - Home prices in major US cities fell in August but posted the smallest drop in 19 months, a survey showed Tuesday, signaling the housing slump at the center of financial crisis is stabilizing.
The Standard & Poor's/Case-Shiller index showed an 11.3 percent year-over-year decline in home prices in 20 major metropolitan areas -- the smallest drop since January 2008.
Analysts had expected an 11.9 percent fall in August.
On a seasonally adjusted basis, prices rose 1.0 percent from July to August this year, following a 1.2 percent gain in the June-July period and a 0.9 rise in May-June.
"That means prices rose at a 6.7 percent annualized rate in the three months to August, compared to the previous three months," said Ian Shepherdson, chief US economist for High Frequency Economics.
In the 10 top markets, prices fell 10.6 percent in August from a year ago.
Nineteen of the 20 metro areas and both composites showed an improvement in the annual rates of decline with August?s readings compared with July, the report said. Cleveland, Ohio, was the only exception.
"Broadly speaking, the rate of annual decline in home price values continues to improve," said David Blitzer, chairman of the index committee at Standard & Poor?s.
"The two composites and 19 of the 20 metro areas showed an improvement in the annual rates of return, as seen through a moderation in their annual declines."
Home prices contracted after a severe home mortgage meltdown that sparked a financial crisis, plunging the economy into a recession in December 2007.
The market has been benefiting from a tax credit of 8,000 dollars for first-time buyers that expires on November (Frankfurt: A0Z24E - news) 30. Many buyers are rushing to sign contracts to be sure to close the deal before the credit expires.
"The turnaround is partly a reflection of the rise in home sales, which is in turn partly due to the tax credit, and a substantial drop in inventory," said Shepherdson.
"The tax credit seems likely to be extended but we worry about a wall of supply next spring from both private sellers and foreclosures. Still, for now these are welcome numbers."
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