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Home Prices Show Record Drop

A key index declines 3.2% -- the steepest fall since tracking began 20 years ago.

Updated from 10:04 a.m. EDT

Housing prices across the U.S. fell 3.2% in the second quarter from a year earlier -- the largest decline in at least 20 years, according to the S&P/Case-Shiller home price index.

The even worse news is that this data measured price activity up until June, which was before the sharp reduction in mortgage lending this summer, stemming from the broader credit crunch.

"The pullback in the U.S. residential real estate market is showing no signs of slowing down," says Robert J. Shiller, chief economist at MacroMarkets LLC and a co-creator of the index.

The 3.2% year-over-year decline for the quarter marks the lowest point in the index's reported history, which dates back to January 1987.

The index that tracks the 20 largest U.S. cities showed prices dropped 3.5% from a year earlier.

On a regional level, 17 of the 20 metro areas showed declines in their annual growth rate from what was reported in May, Shiller said.

The three cities with year-over-year gains in the quarter were Charlotte, N.C., with a 6.8% price increase; Portland, Ore., with a 4% rise; and Atlanta, with a 1.6% climb.

The worst-performing market was Detroit, where prices fell 11% in one year. San Diego, Washington D.C., and Tampa, Fla., were the next biggest duds, with housing prices falling about 7% in each market.

Homebuilder stocks, which were already battered Monday on weaker-than-expected existing-home sales data, fell on the news.

Centex

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was sliding $1.71, or 5.7%, to $28.57, and

Pulte Homes

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was falling 64 cents, or 3.9%, to $16.06.

KB Home

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was down $1.40, or 4.6%, to $28.79, while

D.R. Horton

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lost 57 cents, or 3.8%, to $14.64.