America’s economic prospects appeared to take a turn for the better today as new data showed that US house prices, the volume of home sales and consumer sentiment were holding up better than expected.

Although house prices are still falling, the rate of decline in the second quarter was only about a third of the drop recorded in the previous three months, according to the S&P/Case Shiller national home price index.

The price of the average American home fell by 2.3 per cent in the second quarter, compared to a 6.8 per cent drop in the previous three months, according to the index.

Meanwhile, The New York-based Conference Board’s confidence index, a key measure of consumer sentiment, rose from 51.9 to 56.9 in July, well ahead of the consensus analyst forecast of 53.

The jump was attributed to the declining price of petrol.

Seperately, the Commerce Department said that July saw an unexpected gain in the sale of new homes, as heavily discounted properties enticed customers.

The number of so-called new single-family homes rose by 2.4 per cent in July to an annual rate of 515,000 units, the most since April.

However, July’s jump in sales were revealed after much weaker sales in June than had been previously expected, after transactions shrank to an annual rate of 503,000, the lowest level since September 1991.

The S&P/Case Shiller index also showed that the average US house price declined by 15.4 per cent in the year to July, with Las Vegas recording the biggest fall over that period – of 29 per cent.

Miami was the next biggest faller, declining by 28 per cent in the year to July, according to the S&P/Case Shiller index.

Mike Moran, chief economist at Daiwa Securities in New York, said: "I thought it was a reasonably good report on the housing market. We had a much smaller rate of decline than we had in prior months."

David Sloan, an economist at 4Cast, the market analysis group, added: "Prices are still falling but at a progressively lesser pace, this is the slowest decline since last July. It seems that some areas are now finding a base. It is reasonably encouraging in that it suggests that some parts of the problem are more localised now."

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