A closely watched index of home prices in 20 major U.S. cities took a dip in August, as a summer sales swoon caused by the expiration of popular home-buyer tax credits slowed the market.
Prices of previously owned single-family homes fell 0.2% in August compared with July, according to the Standard & Poor's/Case-Shiller index, which was released Tuesday. Of the 20 cities, 15 posted drops, including every city that the index tracks in California, where metro areas had shown improvement for more than a year.
Prices were up 1.7% in August compared with the same month last year, but the year-over-year rate of increase also slowed, underscoring weakness in the U.S. housing market.
"A disappointing report," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "Home prices broadly declined in August."
Los Angeles was down 0.4%, San Diego, 0.6%, and San Francisco, 0.3%, according to the non-seasonally adjusted data. The only cities posting increases were Chicago, up 0.4%; Detroit, 0.5%; Las Vegas, 0.1%; New York, 0.2% and Washington, 0.3%.
The market's boost from federal tax credits of up to $8,000 for certain buyers evaporated in July and sales plunged. Sales have shown modest improvement recently but remain weak.
Economists believe those tax incentives pulled sales that would have occurred in the latter part of this year into the first half, and now the housing market is feeling the fallout.
Adjusted for seasonal variations, the Case-Shiller index fell 0.3%. But Standard & Poor's has warned that the index's adjusted version is no longer a reliable gauge of prices because of distortions caused by the economic crisis.
The Case-Shiller index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time. From those data, an index score is used to show price changes. An index score of 100 reflects January 2000 prices.