U.S. home prices dropped 4 percent in August from a year earlier as the housing market struggles to stabilize, according to the Federal Housing Finance Agency.
The slump was led by a 7.6 percent decrease in the region that includes Colorado and Arizona, the agency said today in a report from Washington. The second-largest decline was 6.8 percent in the area that includes California. Prices are down 19 percent from an April 2007 peak, the FHFA said.
Falling home prices are crimping consumer spending and eroding confidence in real estate, making housing among the most “pressing issues” facing the U.S. central bank, Federal Reserve Bank of New York President William Dudley said in a speech yesterday. The federal government, in an effort to stabilize the market, said yesterday it will allow qualified homeowners to refinance mortgages regardless of how much their houses have dropped in value.
Measured from July, home prices fell 0.1 percent, according to the FHFA. That was worse than economists’ forecast for an increase of 0.2 percent, the average of 14 estimates in a Bloomberg survey.
A separate report today measuring home prices in 20 U.S. cities showed a 3.8 percent decline in August from a year earlier. The S&P/Case-Shiller index was little changed from the previous month after adjusting for seasonal variations.
The FHFA report measures purchases using mortgages backed by Fannie Mae and Freddie Mac. It doesn’t provide a specific price for homes.
As measured by the National Association of Realtors, the median home price was $171,200 in August, the period covered by the government report. In September, it fell to $165,400, the Realtors said in a report last week.