US house prices are falling fast

US house prices fell by a record 19% in January compared with a year earlier, according to a closely-watched index.

The Standard & Poor's/Case-Shiller Home Price index records prices in 20 of the largest cities in the US.

The index also showed a month-on-month fall as prices fell 2.8% in January compared with December.

Earlier this month, figures showed home construction in February rose by a quarter year-on-year, raising hopes the US housing market may be bottoming out.

'Downward path'

"Home prices, which peaked in mid-2006, continued their decline in 2009," said David Blitzer at S&P.

"There are very few bright spots. Most of the nation appears to remain on a downward path, with all 20 metro areas reporting annual declines," he explained.

Jim Awad at Zephyr Management said: "I think what this says is that the rally in the [stock] markets is based on a hope that the economy is bottoming and that the housing market is bottoming.

"This data is part of the reality check we're going to get over the coming month."

From their peak in the second quarter of 2006, house prices have now fallen by 29.2%, according to the S&P/Case-Shiller index.

The 19% fall in January is the biggest drop since the index began in 1988.

Prices in Phoenix fell the most (35%), closely followed by Las Vegas (32.5%) and San Francisco (32.4%).

The smallest fall was in Dallas, where house prices fell by 4.9%.