US house prices at 6-year low

US HOUSE prices fell 0.5 per cent in July to their lowest level in six years, official figures showed yesterday, heaping further woes on homeowners as the end of government-backed tax credits aimed at first time buyers began to bite.

The US government had offered first time buyers a tax credit of $8,000 (£5,106) to try to stabilise the housing market but the scheme ended on 30 April. House prices have also been hit by increased availability of foreclosed homes and a near 10 per cent unemployment rate.

The Federal Housing Finance Agency’s (FHFA) monthly house price index also revised down the fall in house prices for June from 0.3 per cent to 1.2 per cent.

It said the unusually large revision reflected the addition of new data from late June that showed considerably weaker prices than earlier in the month. US house prices have now fallen 3.3 per cent since July last year and 13.8 per cent since their peak in April 2007.

The figures came just a day after US Commerce Department figures showed house building in the US increased by 10.5 per cent in August – the largest increase since November – to a seasonally-adjusted annual rate of 598,000 units. Analysts had expected the figure to be 550,000 units.

The FHFA monthly index is calculated using purchase prices of houses bought with mortgages that have been sold or guaranteed by Fannie Mae or Freddie Mac, the two largest mortgage lenders in the US.