House prices in 20 U.S. cities declined in the year that ended on Sept. 30 at the fastest pace on record as rising foreclosures pushed down property values.
The S&P/Case-Shiller home-price index dropped 17.4% in September from a year earlier, more than forecast, after a 16.6% decline in August. The gauge has fallen every month since January 2007. (It is published by Standard & Poor's Corp., Fiserv Inc. and MacroMarkets LLC.)
"Price declines have already led to considerable improvements in affordability, but more foreclosures and an inventory overhang will keep depressing prices," Abiel Reinhart, an economist at JPMorgan Chase & Co., said before the report came out on Tuesday.
Home prices decreased 1.8% in September from the prior month after declining 1% in August, the report showed. The figures are not adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.
The publishers of S&P/Case-Shiller also released quarterly figures for nationwide home prices. That measure showed a 16.6% drop in the three months through September from the previous three months, compared with a 15.1% drop in the second quarter.
Economists forecast the 20-city index would fall 16.9% from a year earlier, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from declines of 16% to 17.2%.
Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in September, led by a 31.9% drop in Phoenix and a 31.3% decline in Las Vegas.
"The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its fundamentals," David Blitzer, the chairman of the index committee at S&P, said in a press release.
Robert Shiller, the chief economist at MacroMarkets and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index.
Another index, published by First American CoreLogic, paints a more stable picture than the S&P/Case Shiller one. The unit of First American Corp. of Santa Ana, Calif., said last week that its national home price index dropped 11.2% from a year earlier.
Mark Fleming, First American CoreLogic's chief economist, wrote in an e-mail to clients that home prices, as measured by his firm's index, "have now maintained an annualized depreciation rate of between 10% and 11% for eight months in a row."
Also Tuesday, the Federal Housing Finance Agency said the price of a U.S. home purchased in the third quarter fell by an average 6% from a year earlier, the most on record for this index. For September the drop was 1.3%, bringing prices down 7.9% from their April 2007 peak, the regulator said. The FHFA index is calculated using repeat sales of homes where Fannie Mae or Freddie Mac owned or guaranteed both the old and new mortgage.