Home price index up 0.7% in Feb.; foreclosures hit 4 states hardest

— -- Prices of single-family homes rose by a seasonally adjusted 0.7% in February from January but were down 6.5% from a year earlier, the Federal Housing Finance Agency (FHFA) said Wednesday.

The regulator's monthly home price index for January was revised down to a 1% increase from a previously reported 1.7% gain.

The index is 9.5% below its April 2007 peak.

In a separate report released Wednesday, the 26 U.S. cities with the worst foreclosure problems in the first quarter were concentrated in four states — California, Florida, Arizona and Nevada.

The report on foreclosures by RealtyTrac said the highest foreclosure rates were found in Las Vegas, Merced, Calif. and the Cape Coral-Fort Myers area in Florida. Next on the list were the California metro areas of Stockton, Riverside, Modesto, Bakersfield and Vallejo-Fairfield.

Rounding out the top 10 were Phoenix and Port St. Lucie, Fla. Outside of the four high-foreclosure states, the worst foreclosure rates were in Boise City, Idaho (No. 27) and Greeley, Colo. (No. 29).

The number of American households threatened with losing their homes grew 24% in the first three months of this year and is poised to rise further as major lenders restart foreclosures after a temporary break.

Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same period a year earlier, RealtyTrac said last week.

The big unknown for the coming months is President Barack Obama's plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans.

The Obama administration expects it to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace the efforts, despite a promise of $75 billion in incentive payments.

The home prices report found for the nine Census Divisions, seasonally-adjusted monthly price changes in February ranged from a 1.2% decline in the East North Central Division to a 3.8% increase in the Pacific Division, FHFA said.