S&P: Home prices down 16% in July from last year

NEW YORK -- Big-city home prices dropped steeply in July from a year earlier in a sign that the housing market bottom may not have been reached.

The Standard & Poor's/Case-Shiller 20-city housing index released Tuesday showed a 16.3% decline from July 2007. It was the steepest such decline since the index started in 2000. Home values in all 20 cities fell year-over-year.

Las Vegas and Phoenix reported year-over-year declines of nearly 30%. Miami reported an annual decline of 28.2%.

Since the peak of the housing market in mid-2006, the 20-city price index has declined 19.5%, according to Standard & Poor's.

The new report shows a slowing pace of declines that may hint at stabilization in some markets: during the May-July period, home prices fell about 2.2%. That's far less than during three months of February through April, when prices declined by more than 6%. Atlanta, Boston, Dallas, Denver and Minneapolis all reported price increases during the May-July period.

"That's positive and reflects that we saw a surge in foreclosure sales in the beginning of the year," says Mark Zandi, chief economist at Moody's Economy.com. As more of those homes move off the market, the rate of price declines is slowing, he said. About 20% of the market is foreclosure sales, he says.

Lawrence Yun, chief economist with the National Association of Realtors, said the slowing pace of price declines may indicate some stabilization in the market. "Pockets of the country have turned around," said Yun.

Economists have been searching for signs that the steep drop in housing prices over the last two years is slowing. Price declines are leaving more homeowners owing more for their properties than they could sell them for.

"It's a problem because people had been using homes for a source of funding through home equity. Now they can't do that," says Joel Naroff, of Naroff Economic Advisors. "Their spending is going to go down."

The Case-Shiller index follows other recent reports showing the housing slump has yet to turn around.