U.S. Home Prices Fell 3.2% in Third Quarter, FHFA Says

U.S. home prices fell 3.2 percent in the third quarter from a year earlier as demand weakened without federal tax credits, the Federal Housing Finance Agency said.

The Atlanta area led declines among the 25 largest metropolitan regions, with a 10 percent slump, the FHFA said in a statement. Prices rose 4.6 percent in the San Diego area for the biggest gain, according to the agency, which measures sales of homes with mortgages backed by Fannie Mae or Freddie Mac.

Home sales fell to record-low levels after the April 30 expiration of a tax credit of as much as $8,000 for buyers. An overhang of distressed properties and an unemployment rate hovering near 10 percent will likely cause more price declines, according to Celia Chen, an analyst with Moody’s Analytics Inc. in West Chester, Pennsylvania.

"Our overall expectations for home prices is that they’ll drop by another 8 percent by the third quarter of next year," she said in a telephone interview before the FHFA report.

Measured from June 30, prices fell 1.6 percent, the Washington-based FHFA said. Economists had projected prices would decrease 1.1 percent, according to the average of 15 estimates in a Bloomberg survey.