Single-family home prices ended 2011 on a downbeat note as a drop in December prices sent the seasonally-adjusted index to its lowest level since 2003, according to a closely watched survey on Tuesday.
The S&P/Case-Shiller composite index of 20 metropolitan areas declined 0.5 percent on a seasonally adjusted basis, in line with economists' expectations, after falling 0.7 percent in November.
The 20-city index fell to 136.63, the lowest level since January 2003.
After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until today's report we had believed the crisis lows for the composites were behind us, David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement.
The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012.
U.S. stock index futures held at lower levels immediately following the data as investors also took in an earlier report that showed new orders for long-lasting U.S. manufactured goods fell in January by the most in three years.
Prices in the 20 cities dropped 4.0 percent year over year, more than forecasts for a decline of 3.6 percent. For the fourth quarter the national index fell 1.7 percent on a seasonally adjusted basis.
House prices are continuing to be very weak even though we have seen some leveling off on the activity side of the data, said Sean Incremona, economist at 4Cast Ltd in New York.
It will take some time for that relatively positive activity to filter in to prices, but at the same time we are still looking at foreclosure issues, distressed properties and low absolute levels of activity. It is really a tough market for these prices to make any progress.
During 2011, prices declined in 19 out of the 20 cities in the index. Atlanta was hardest hit with a drop of nearly 13 percent.
(Reporting By Leah Schnurr; Additonal reporting by Chrise Reese; Editing by Padraic Cassidy)