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.

The index is calculated using purchase prices of houses financed with mortgages that have been sold to or guaranteed by mortgage finance sources Fannie Mae or Freddie Mac

FHFA regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.

Contributing: Reuters, Associated Press