American house prices declined at their fastest rate for more than six years in October, with homes in Miami losing 12 per cent of their value, it emerged yesterday.

According to the Standard & Poor’s/Case Shiller index of house prices in the US, the value of existing, single-family homes fell 6.7 per cent in October compared with the same period the year before.

The figures indicate that America’s housing recession – already the worst for 16 years – is far from over. Professor Robert Shiller, co-founder of the index and an economics academic at Yale University, said: “No matter how you look at these data, it is obvious that the state of the single-family housing market remains grim.”

The 6.7 per cent fall surpasses a 6.3 per cent drop in April 1991.

While Washington has sought to limit the number of Americans at risk of losing their homes by negotiating with lenders to freeze mortgage repayments, there is still a glut of unsold property on the market, depressing prices. Washington also urged mortgage lenders to tighten up their lending criteria. Such a measure is expected to make mortgages more difficult to secure, a move that will further dampen the property market.

This week, the US Commerce Department is due to publish figures showing the number of new homes that were sold in November. Some estimates suggest that sales will have fallen by 1 per cent compared with the month before.

Earlier this month, Fannie Mae, the mortgage buyer, said that it expected sales of new homes to fall by about 9 per cent next year.

According to the S&P/Shiller index, Charlotte, Portland and Seattle were the only cities tracked that showed house price rises.

The US Federal Reserve Bank is nervous that effects of the housing recession will spill over into the wider economy and hit consumer spending, the key driver of US growth. Some economists are expecting the US economy to slide into a recession next year.

US homeowners have been in pain for some time. A number of Americans took out adjustable rate mortgages over the past two years, where the size of the monthly repayment rose during the life of the loan. Before the housing slump, many of those homeowners had hoped to be able to remortgage or extract capital from their properties once repayments became too high. But the housing market fell, and has left a number of Americans at risk of losing their homes.

Last month, RealtyTrac said that in one town in California – Stockton – one household in every 31 had entered the foreclosure process.

The housing numbers depressed Wall Street yesterday alongside comments from Target, the discount retailer, which warned that sales in December may have declined overall. The company admitted that the number of shoppers had slowed following the Thanksgiving weekend in November.

Frederic Dickson, chief market strategist at DA Davidson & Co in Oregon, said: “The consumer is feeling some pain. Investors are going to be looking for a spillover effect.”

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