U.S. home prices fell by 2.0 percent in the third quarter of 2010, after having risen 4.7 percent in the second quarter, according to data from S&P/Case-Shiller Home Price Indices.

S&P said that nationally home prices are 1.5 percent below their year-earlier levels.
“While some of the bad numbers may reflect the end of the government’s tax incentive for first time

homebuyers, there are other problems weighing on the housing market,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor's.

“The national economy is certainly the number one issue for housing. Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes. New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off.”

Indeed, S&P indicated that as of the third quarter of 2010, average home prices across the U.S, are at similar levels to what they were in the middle of 2003.

Since its trough in the first quarter of 2009, nationally home prices have only grown by 4.9 percent.

Looking at the twenty metropolitan regions that S&P/Case-Shiller tracks, only five (Boston, Los Angeles, San Diego, San Francisco and Washington) showed year-over-year average home price gains. Prices in Boston edged up 0.4 percent, while they rose in a range between 4.4 percent and 5.5 percent in the other four cities.

Prices dropped in all other fifteen metropolitan regions over the past year, with Chicago (5.6 percent) showing the steepest decline.

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