NEW YORK (AP) -- U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor's began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday.

 

The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index's history.

The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier.

A separate index that covers 20 U.S. metropolitan areas dropped 4.9 percent in September from a year earlier, with 15 metro areas posting declines. Only five metro areas -- Atlanta, Charlotte, N.C., Dallas, Portland, Ore., and Seattle -- showed an increase in prices, but S&P noted that the pace of the rise is decelerating.

Tampa and Miami led the index with the lowest year-over-year declines at 11.1 percent and 10 percent, respectively. It also showed drops in San Diego of 9.6 percent; Detroit, 9.6 percent; Las Vegas, 9 percent; Phoenix, 8.8 percent; and Los Angeles, 7 percent.

The S&P's 10-area index decreased 5.5 percent in September from the previous year.

Last week, the National Association of Realtors said that sales of existing homes fell in 46 states in the third quarter. However, the trade group said home prices rose in 93 of the 150 metropolitan areas surveyed.

WASHINGTON (AP) -- Construction of new homes and apartments rebounded in October by the largest amount in eight months but the unexpected increase was not viewed as a signal of a housing turnaround.

The Commerce Department reported Tuesday that housing construction rose by 3 percent in October, the first increase after three months of declines and the biggest advance since a 6 percent rise last February.

However, all of the strength came in the volatile apartment sector, which jumped by 44.4 percent. Construction of single-family homes fell for a seventh straight month, declining by 7.3 percent in October compared to September.

Analysts believe that housing is likely to remain weak through much of 2008 as builders struggle with historically high levels of unsold homes and rising mortgage defaults which are dumping even more homes back on glutted markets.

The overall increase left construction in October at a seasonally adjusted annual rate of 1.229 million units, down 16.4 percent from activity a year ago.

Applications for building permits, seen as a good sign of future activity, fell for the fifth straight month in October, dropping by 6.6 percent to an annual rate of 1.178 million units. That is down a sharp 24.5 percent from a year ago.

The rebound in overall construction came as a surprise to analysts who had forecast a drop of 1.3 percent. However, the 6.6 percent slide in permit applications was more severe than the 4.8 percent fall expected by Wall Street.

Troubles in housing are expected to seriously depress overall economic growth in the current quarter and early next year with some analysts growing more concerned about an outright recession.

The Federal Reserve has cut interest rates twice since September in order to insulate the economy from troubles in housing and credit markets. However, Federal Reserve Chairman Ben Bernanke and other Fed officials have signaled that they are not likely to cut interest rates further unless the economic weakness deepens significantly because of worries that a surge in oil prices will make inflation worse.

The rebound in construction in October reflected gains in all regions of the country except the South, where building activity fell by 4.6 percent. Construction rose by 21.1 percent in the Midwest, 8.5 percent in the Northeast and 5.8 percent in the West.