Home prices drop by a record amount

updated 11:05 a.m. ET Aug. 26, 2008

NEW YORK - A widely watched index released Tuesday showed home prices dropping by the sharpest rate ever in the second quarter, but the data for June suggest the severity of the housing slump may be waning.

The Standard & Poor’s/Case-Shiller U.S. National Home Price Index tumbled a record 15.4 percent during the quarter from the same period a year ago.

The monthly indices also clocked in record declines. The 20-city index fell by 15.9 percent in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 17 percent, its biggest decline in its 21-year history.

However, the rate of single-family home price declines slowed from May to June, a possible silver lining, the index creators said.

“While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level” said David M. Blitzer, chairman of the index committee at S&P.

Fourteen cities in the monthly index showed improvement from May to June; nine recorded positive returns.

The index’s glimmer of hope follows another surprisingly positive housing headline on Monday. Existing home sales rose in July, surpassing expectations, as buyers snatched up cheap distressed properties in the hardest hit housing markets.

Still, on a year-over-year basis, no city in the Case-Shiller 20-city index saw price gains in June, the third straight month that’s happened.

Las Vegas led the largest annual declines, falling 28.6 percent followed by Miami at 28.3 percent and Phoenix at 27.9 percent.

Charlotte, N.C., the last city in the index to report depreciation during the current housing downturn, posted its largest drop since 1991 at 1 percent.

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