Home prices in 20 U.S. cities rose in September at the slowest pace in eight months, showing the latest slump in sales is destabilizing housing.
The S&P/Case-Shiller index of property values climbed 0.6% from September 2009, the smallest gain since January, the last time prices declined year over year, the group said Tuesday in New York.
The increase was smaller than the 1% median forecast in a Bloomberg News survey of economists.
The end of a government tax credit and unemployment near 10% have led to a decrease in demand, delaying a recovery in the industry that precipitated the worst recession since the 1930s.
Mounting foreclosures and declining home values threaten to undermine the improvement in consumer confidence that is helping boost spending and accelerate economic growth.
Housing "is on the brink of another substantial downturn," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. "Supply far exceeds demand and the only remedy is further price declines."
The median forecast was based on the projections of 28 economists surveyed.
Estimates ranged from an increase of 1.6% to a decline of 3.4%. Year-over-year records began in 2001.
Prices climbed 1.7% in the year that ended in August.
The gauge fell 0.8% in September from the previous month after adjusting for seasonal variations, the biggest drop since April 2009, following an August decrease of 0.5%. Unadjusted prices fell 0.7% from the prior month.
The year-over-year gauge provides better indications of trends in prices, the group has said.
The panel includes Karl Case and Robert Shiller, the economists who created the index.
Nationally, prices decreased 1.5% in the third quarter from a year earlier and were down 2% from the previous three months.
Fifteen of the 20 cities in the S&P/Case-Shiller index showed a year-over-year decline, led by a 5.6% drop in Chicago. San Francisco showed the biggest year-over-year increase, with prices rising 5.5%.
Compared with the previous month, 18 of the 20 areas covered showed a decrease on an unadjusted basis, led by Cleveland. The only two showing month-over-month increases were Washington and Las Vegas.
"Another weak report," David Blitzer, the chairman of the index committee at Standard & Poor's, said in a press release. "The national economy is certainly the No. 1 issue for housing. Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes."
Housing demand has slumped after a tax credit worth as much as $8,000 expired in June.
