U.S. home price index falls 0.2 % in August, 0.3% in Mpls

ALAN ZIBEL,AP Real Estate Writer,

WASHINGTON (AP) -- Home prices are weakening around the U.S., even in metro areas that were showing strength earlier in the year.

The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday fell 0.2 percent in August from July. Fifteen of the cities showed monthly price declines. Prices are expected to drop further in the coming months.

The biggest drop was in Phoenix. Prices there fell 1.3 percent from a month earlier. Prices in San Francisco and Los Angeles, which had been increasing, both fell in August from July.

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Home prices in the Minneapolis area were down nearly 0.3 percent, putting the Twin Cities area in the middle of the pack among the 20 cities.

Detroit, Chicago, Washington, New York and Las Vegas were the only cities to show monthly price increases.

The 20-city index has risen 6.7 percent from its April 2009 bottom. But it remains nearly 28 percent below its July 2006 peak.

Home prices rose in many markets from April through July. But those increases were mostly fueled by government tax credits, which have expired. Now that the peak buying season is over, a record number of foreclosures, job concerns and weak demand from buyers are pushing prices down.

Meanwhile, in markets that have been devastated by the housing bust, allegations of flawed foreclosure paperwork are leaving buyers wary of purchasing homes in foreclosure.

Potential buyers are worried the sale will be canceled or complicated if the previous owners claim in court that their foreclosure was invalid.

Most experts expect roughly 5 million homes to be sold through the entire year. That would be in line with last year's totals and just above sales for 2008, the worst since 1997.