The decline in home prices in 20 major U.S. cities slowed in February for the first time since 2007, amplifying signals that the market may be stabilizing.
The S&P/Case-Shiller index's 18.6% decrease, reported Tuesday, compares with a record 19% decline in January for the index, which has fallen every month since January 2007.
Year-over-year records began in 2001.
Declining prices, Federal Reserve Board efforts to bring mortgage rates down and government tax credits for first-time buyers may continue to support sales after an almost four-year slide. But mounting unemployment means purchases are unlikely to rebound quickly.
"We're probably getting close to an inflection point," said Michael Feroli, an economist at JPMorgan Chase & Co. in New York, who had correctly forecast the drop in the index. Still, he said, "if we are indeed going to see a recovery in the second half," the double-digit price drops will need to abate in the next few months.
Economists had forecast the index would drop 18.7% from a year earlier, according to the median of 27 projections in a Bloomberg News survey. Estimates ranged from declines of 17% to 19.2%.
Compared with a month earlier, home prices fell 2.2% in February, after a 2.8% decline in January, Tuesday's report showed.
On an annual basis, Tuesday's figures showed the first improvement in the rate of change since December 2005.
The price figures are not adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to-month ones.
All 20 cities in the index showed a year-over-year price decrease in February, led by declines of 35% Phoenix, 32% in Las Vegas and 31% in San Francisco. Prices also fell in all 20 cities compared with January.
"While the declines in residential real estate continued into February, we witnessed some deceleration in the rate of decline in some of the markets," said David Blitzer, the chairman of the index committee at Standard & Poor's Corp., which publishes the indexes along with MacroMarkets LLC and Fiserv Inc.
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 indexes using research from the 1980s. They sold their company, Case Shiller Weiss Inc., to Fiserv in 2002.