Home prices fall at record pace in May

NEW YORK (Reuters) - Prices of U.S. single-family homes plunged at a record pace in May from a year earlier, with each of the 20 regions monitored showing annual declines for a second month, according to the Standard & Poor's/Case Shiller home price indexes reported on Tuesday.

KEY POINTS:

* The S&P/Case Shiller composite index of 20 metropolitan areas fell 0.9 percent in May from April, bringing the measure down 15.8 percent from May 2007.

* Economists surveyed by Thomson Reuters expected the monthly and annual drops would be 1 percent and 16 percent, respectively.

* S&P said the composite index of 10 metropolitan areas declined 1 percent in May, for a 16.9 percent year-over-year drop.

COMMENTS:

MICHELLE MEYER, ECONOMIST, LEHMAN BROTHERS, NEW YORK:

"The data came in better than we were expecting and better than the market was expecting. The increase in 7 of the cities was encouraging, but we are not going to get too excited about the data yet as it is not seasonally adjusted and prices tend to be higher during the spring selling season. We will see how this plays out in the coming months."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

"The first thing is that the degree to which it gets worse compared to last month is smaller than it was the month before and the month before that. The rate of decline is not accelerating as fast. You also see increasingly stark differences across markets which suggests that the supply/demand imbalance is less severe in some places than in others. There is some light very very far down the tunnel as far as the stabilization of the national housing market. Some markets still have major declines yet to go, but the good news is that others might not. The markets that still have major declines ahead are the 'poster children' like Florida and Phoenix where great amounts of building took place and yet prices got very high."

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER,

NEW JERSEY:

"It's a little bit dollar positive. There's actually a little bit of stabilization in this number even though it's backward-looking. But overall the fact that it didn't fall as much as it had been forecast is just another piece of the stream of relatively positive or at least stabilizing U.S. economic data. The dollar is gathering steam for another push higher."

IAN LYNGEN, INTEREST RATE STRATEGIST, RBS GREENWICH CAPITAL,

GREENWICH, CONNECTICUT:

"While the month-on-month declines are slowing, the direction remains consistent, and we continue to see risks to the housing market as the pipeline of foreclosures and tightening credit standards persist."

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

"The pace of decline is a little less than expected -- it is looking a little like the pace of decline has peaked. We saw the sharpest decline in February. Prices are still declining and they have got further to fall, but it seems like we are over half way there on the price declines. I think we are going to see a fairly symmetric pattern with the pace fairly modest at first and gradually accelerated to reach its peak in February and now the pace is starting to moderate. Prices are still falling but not as fast."

GARY THAYER, SENIOR ECONOMIST, WACHOVIA SECURITIES, ST. LOUIS:

"This is still showing weak home prices, but the situation may be getting a little better. On a month-to-month basis, the price decline was not as bad as what we saw earlier this year.

"If home prices continue to slide that would continue problems for a lot of institutions. But before prices stop going down, we need to see the rate decrease and level off."It was better than expected, but not significantly better. So, I don't think it's going to move the markets that much."

MARKET REACTION: STOCKS: U.S. equity index futures hold gains on the session BONDS: U.S. Treasuries hold losses on the session DOLLAR: U.S. dollar holds gains against euro and yen