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The S&P/Case-Shiller Home Price Indexes once again offered no comfort to those watching real estate markets. The 10-city and 20-city composite indexes fell another 0.5% and 0.4%, respectively, in July, continuing their long downward slide. The 10-city composite index has declined for the past 13 consecutive months and is currently down 4.5% from its year-ago level. Meanwhile, the 20-city composite has declined for the past 12 consecutive months and is currently down 3.9% from the prior year.

"The year-over-year decline reported for the 10-city composite is the lowest since July 1991. The lowest annual decline in this Index, which dates back to January 1987, was -6.3%, which was reported in April 1991. The further deceleration in prices is still apparent across the majority of regions, with 16 of the 20 metro areas showing a drop in their annual growth rate from what was reported in June," says Robert Shiller, one of the creators of the S&P/Case-Shiller indexes and the chief economist for Macro Markets LLC. (Read IndexUniverse.com's interview with Robert Shiller here.)

The only five metropolitan areas showing positive one-year returns remain Atlanta, Charlotte, Dallas, Portland and Seattle. However, their rates of growth have been decelerating, according to S&P, and Atlanta and Dallas are growing dangerously close to negative returns, with annual rates of growth for July 2007 of just 1.2% and 0.8%, respectively. Seattle is still showing the highest one-year returns of all, at 6.9%.

July is a significant month because that is when the subprime mortgage market meltdown really hit the U.S. stock market and the effects began to be felt in global markets as well. August was another rocky month in the markets, and based on the dismal performance of the home price indexes so far, there's no reason to think that the reading for August will indicate any change in the trend.

In written testimony to lawmakers that was presented last week during hearings held by the Joint Economic Committee, Shiller expressed concern that the decline in home prices could be the worst since the Great Depression and said that there was a significant risk of a recession in the next year. (Read the official testimony here.)

The S&P/Case-Shiller Home Price indexes tracks sales of existing single-family homes and are published on a monthly basis.

Written by Heather Bell