URBALO

Home prices have shown few signs of any turnaround, and a new report sees the downward slide continuing. Major housing markets showed worse declines. The Case-Shiller index covering 20 top metro areas for the month of June fell 3.5 percent, and the 10-city index dropped 4.1 percent year-over-year.

“The pullback in the U.S. residential real estate market is showing no signs of slowing down,” Robert J. Shiller, Chief Economist at MacroMarkets LLC said in a statement. “The year-over-year decline reported in the 2nd quarter of 2007 for the National Home Price Index is the lowest point in its reported history, which dates back to January 1987.”

The slump in housing prices began in mid-2005 when appreciation rates first started to slow and then reverse. During the past few months a credit crisis and a huge jump in default rates and foreclosures contributed to market declines.

Defaulting home owners have unleashed many new homes onto already sizable inventories.

Demand has fallen as home loans of all types have become harder to obtain, taking many potential home buyers off the market. First, it was subprime borrowers who began having trouble arranging financing. Then Alt-A mortgages (usually low- or no-doc loans) dried up.

Lenders have also tightened the screws on jumbo loans. These big-ticket mortgages do not have a guaranteed secondary market because they exceed the dollar limits that of loans Freddie Mac and Fannie Mae, the government sponsored agencies created by Congress to add liquidity to housing markets, will buy.

And, even though prices have declined and demand eased, affordability has improved only slightly during the past year. Many sellers have stubbornly stuck to listing prices suggested by the sales of comparable homes a year or more ago, despite price drops since. Overall, barely 43 percent of all homes on the market are affordable to local residents earning median household incomes, up from 40.6 percent a year ago, according to the National Association of Home Builders.