UPDATE 1-U.S. home prices fell in August, near lows

(Adds graphic, details from report, quotes, byline)

By Julie Haviv

NEW YORK, Oct 26 (BestGrowthStock) – Prices of U.S. single-family
homes fell for a second straight month in August, hovering
around recent lows after the expiration of popular homebuyer
tax credits, according a Standard & Poor’s/Case-Shiller home
price report on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan
areas declined 0.3 percent in August from July on a seasonally
adjusted basis where a Reuters poll of economists forecast a
drop of 0.2 percent. The dip followed a seasonally adjusted
decline of 0.2 percent in July.

S&P, which publishes the indexes, also said home prices in
the 20 cities index rose 1.7 percent from August 2009, a slower
annual pace than the 3.2 percent increase in July.

Unadjusted for seasonal impact, the 20-city index fell 0.2
percent after a 0.6 percent July gain. A 0.2 percent rise was
expected.

“A disappointing report. Home prices broadly declined in
August. Seventeen of the 20 cities and both composites saw a
weakening in year-over-year figures, as compared to July,
indicating that the housing market continues to bounce along
the recent lows,” David M. Blitzer, chairman of the index
committee at Standard & Poor’s, said in a statement.

“Over the last four months both the 10- and 20-City
Composites show slowing growth, after sustaining consistent
gains since their April 2009 troughs,” he said.

Blitzer said the housing market appears to have stabilized
at new lows.

“At this time, it does not seem that any of the markets are
hanging on to the temporary momentum caused by the homebuyers’
tax credits,” he said.

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For a graphic on home prices, click on:
http://r.reuters.com/fan32q

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The housing market has been struggling since home buyer tax
credits expired earlier this year. To take advantage of the tax
credits, buyers had to sign purchase contracts by April 30.
Contracts originally had to close by June 30, but that was
extended by three months.

Cary Leahey, economist at Decision Economics in New York,
said the problem right now is the potential shadow inventory of
foreclosures. With a flood of foreclosures, which typically
sell at steep discounts, in the pipeline, home prices will
likely remain depressed for some time.

“If you believe that you can’t have a vibrant economy
without a vibrant housing market, then you have to deal with
the foreclosure problem,” he said.

Home prices in August reflect conditions before banks
temporarily halted foreclosures due to questionable
documentation. Home prices may benefit from fewer foreclosures
in the mix, but any rise should prove to be temporary.

As of August 2010, average home prices across the United
States are back to the levels where they were in late 2003 and
early 2004, S&P said.
(Additional reporting by Ellen Freilich, Editing by Chizu
Nomiyama)

UPDATE 1-U.S. home prices fell in August, near lows