Home Prices Post Record Drop as Slump Enters Third Year

WASHINGTON - Home prices in the nation's largest cities posted their steepest annual decline on record this summer, data showed, as the housing slump ground through its third year with no bottom in sight.

The Standard & Poor's/Case-Shiller index of 20 metropolitan areas fell a record 15.9 percent in June from a year earlier. Las Vegas, Miami and Phoenix — the high fliers of the boom — have all lost more than a quarter of their value from the peak.

About 2.7 percent of all U.S. mortgages were in foreclosure at midyear, the highest level in the three decades the Mortgage Bankers Association has tracked them, and the rate is still climbing.

The inventory of unsold homes stood near 11 months' supply in July — roughly twice what economists consider healthy — ensuring, most analysts say, that prices have further to fall.

Congress responded in July with a sweeping housing bill: a tax credit for first-time buyers, an overhaul of the FHA and a program to refinance up to $300 billion in troubled mortgages. Critics say the program's design will limit participation.

"Everyone asks when it bottoms," said a Yale economist who predicted the bust. "The honest answer is that prices are still falling, credit is still tight and foreclosures are still rising. We are not at the bottom."

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Associated Press writers contributed to this report.

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