Home prices post 18.1 percent annual drop in April

Newfound signs of stability in the housing market could still be threatened by rising foreclosures and slow efforts to stop them, according to two reports released Tuesday.

The Standard & Poor's/Case-Shiller index of 20 major cities showed the smallest monthly decline since June 2008. The index tumbled by 18 percent in April from the year before, but for the third month in a row it was not a record decline. Yearly losses in 13 metros improved compared to March.

"It seems that some stabilization may be appearing in some of the regions," said David M. Blitzer, chairman of the S&P index committee.

But rising foreclosures fueled by layoffs could derail a meaningful turnaround. The number of homeowners at least two months behind or in foreclosure jumped in the first quarter from the previous quarter, a Treasury Department report said Tuesday.

Defaults from borrowers with good credit contributed to much of the increase in seriously delinquent loans, echoing data last month from the Mortgage Bankers Association. As the recession claims more jobs, borrowers in good standing are more likely to miss their mortgage payments.

Efforts to modify home loans have been slow and easily outpaced by the number of new delinquencies. In the first quarter, loan companies modified 185,156 mortgages, up 55 percent from the previous quarter. But the number of foreclosures in process increased to 844,389, up 22 percent.

And nearly one in four borrows who received a mortgage payment reduction fell behind again within six months, the report found.

Four months ago, the Obama administration detailed its "Making Home Affordable" initiative. But progress has been slow.

"So far (the modification program) isn't showing large numbers, which tells me that it's not working and that's a problem," said Patrick Newport, an economist with IHS Global Insight.

Mortgage companies holding about 20 percent of the eligible loans still have not signed up for the plan, according to Treasury.

To put pressure on those lenders, the community group ACORN

held 15 protests around the country Tuesday to call for the companies to sign onto the initiative.

Stabilizing home prices is key to helping stem the foreclosure crisis.

Eight of the 20 metros in the Case-Shiller index posted price gains from March, with Dallas recording the largest increase at 1.7 percent, the index showed. And every city except Charlotte showed some kind of improvement month-over-month.

The 20-city index is off almost 33 percent from its peak in the second quarter of 2006, which means home values are now around 2003-levels.

"Prices are still dropping. They're just no longer in freefall," Newport said.

Hardest hit remain Phoenix and Las Vegas, where home prices have lost more than half their value since their peaks.

The Case-Shiller index tracks repeat sales on a specific group of homes in each city. Sales between related parties, such as family members, are excluded.