House prices in the 20 biggest American cities dropped a nasty 19% in the year to January, the fastest drop on record, according to the S&P/Case-Shiller index of home prices.

That was after an 18.6% drop in the year to December, the biggest calendar year fall on record, and more worrying was the 2.8% drop in the month of January on December.

The Case Shiller index has now fallen 30 months in a row for the big 20 city sample: the fall in January on December was uniform, across all 20 US cities. Prices are now back to late 2003 level, meaning all the gains for more than four years have been wiped out.

House prices in the 10 largest metropolitan areas dropped 2.5% in January, leaving them more than 30% below their peak in mid-2006. (There are two parts to the Indexes, one for 10 big metro areas, the other for the 20 largest metro areas).

The fall means thousands more people saw the value of their homes fall under the size of the mortgages in January.

January saw new home starts and permits hit their lowest level on record, while sales of existing homes were also very low. That they rebounded in February, with mortgages rates falling last month in the wake of the Fed’s move to boost lending, is the only hope for those believing that the black hole that is the US housing sector is steadying.

The US recession began with the collapse of the property bubble, and deepened as the losses gutted America’s banks and other big financial groups.

The Case Schiller Index, which is considered the most accurate of all home price measurement systems in the US, shows that house prices in Detroit, which were not boosted by the bubble, have fallen to 1996 levels, helped no doubt by swelling unemployment lines as the American car industry implodes.

New York, where the subprime mess was dreamed up and manufactured, has seen prices only drop 16% so far in the crash, compared with falls of 29% in other metro markets and more in some of the subprime hotspots like Nevada and parts of Florida and California.

The price declines were across the US, with the Las Vegas, Minneapolis, Detroit, Chicago, Tampa, and San Francisco metropolitan areas all losing more than 4% in a month.

Upwards of 10% of all US mortgages are now 30 to 90 days in arrears, and an estimated 20% of all home owners with a mortgage are under water as their debt exceeds the value of their home.

Now the 19 biggest banks are being stressed tested to see if their balance sheets have valuations that meet these levels, and can withstand unemployment (8.1%) of over 10% and bigger home price falls.

The crisis ain’t over, yet.

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