Home price drop largest on record

NEW YORK (Reuters) - Prices of existing U.S. single-family homes in the third quarter slumped 4.5 percent from a year earlier, matching a record decline from the previous period as the housing downturn deepened, according to a national home price index on Tuesday.

The S&P/Case-Shiller National Home Price Index fell 1.7 percent from June, marking the largest quarterly decline in the index's 21-year history, S&P said in a statement.

Robert Shiller, a Yale University economist and co-developer of Standard and Poor's S&P/Case-Shiller Home Price Indices, on a Standard & Poor's teleconference following the release, said that at this point there is substantial concern and uncertainty about the outlook for the U.S. housing market.

"The downward momentum is looking impressive right now and at the very least ought to be a source of worry about the future for home prices," he said.

The futures market for the S&P Case-Shiller Composite Index is indicating home prices down another 5 percent in 2008, he said.

On the teleconference, titled "Current & Future State of U.S. Housing Market", Shiller said he is not able to predict the bottom for the U.S. housing market at this point of time.

"We do not know where it is going to go from here," he said. "I would hope that it would motivate people to start thinking about hedging their real estate risk."

The quarterly S&P/Case-Shiller index has been falling since the second quarter of 2006 as lenders clamp down on lending to risky borrowers who had depended on home price gains to keep their homes. Rising foreclosures are adding to soaring inventories of unsold homes, depressing prices further.

The composite month-over-month index of 20 metropolitan areas fell 0.9 percent to 195.62 in September from August, bringing the measure down 4.9 percent from a year earlier.