U.S. home prices continued to fall at a record pace, and price declines in Los Angeles and Orange counties outpaced other major metropolitan areas in September, according to a national index released Tuesday.
Local prices dropped 7% from a year earlier, according to the Standard & Poor's/Case-Shiller composite index. The index showed that home prices fell an average of 4.9% in 20 metro areas nationwide.
The index found that median home prices nationwide fell 4.5% in the third quarter compared with a year earlier. That eclipsed the second quarter's record 3.2% decline, which had been the sharpest drop since the index began in 1987.
San Diego recorded the third-worst decline, with a 9.6% drop from the previous year. The only bigger slumps were in the Florida cities of Tampa (11.1%) and Miami (10%).
Detroit mirrored San Diego, recording a 9.6% drop.
The Case-Shiller index measures the value of single-family homes based on their sales histories, excluding condominium units and new properties.
Instead of stating average home prices, the index uses a score measuring percentage changes. The index baseline of 100 reflects home prices in January 2000.
The Los Angeles measurement peaked in September 2006 at 273.9, which meant the typical home in the area would be priced 174% above its January 2000 price.
The Case-Shiller numbers accompanied other grim assessments of the housing market. A U.S. Conference of Mayors report predicted a 16% decline for California home prices in 2008 and a nationwide decline of 7%.
The mayors' report cites foreclosures and failed sub-prime mortgages as driving a housing recession that will drag home values down $1.2 trillion nationwide in 2008.
In California, falling home values will result in a decline of nearly $3 billion in property tax revenue in 2008, the report said.
Also on Tuesday, the chief executive of one of the nation's largest home builders said new-home sales would continue to deteriorate as foreclosed houses flooded the market, dragging down prices.
D.R. Horton Inc. CEO Donald Tomnitz, speaking at a JPMorgan Chase & Co. conference in Las Vegas, said, " '08 is going to be worse than '07 for us and for the industry in general."