U.S. housing market bottom may be a year away: Case

Standard and Poor's said on Tuesday the S&P/Case-Shiller 20-City Composite Index was down a record 18.5 percent in December, with home prices on a month-over-month basis falling 2.5 percent in December from November, compared with a 2.3 percent decline in the previous period. The 20-city index dates to 2000.

S&P said its 10-City Composite Index declined 2.3 percent in December from November, compared with a 2.2 percent decline in the previous period, for a 19.2 percent drop year over year -- also a record for the index, which dates back to 1988. From the peak in the second quarter of 2006, average home prices are down 26.7 percent, S&P said.

The U.S. housing market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards, and record mortgage foreclosures push down home prices. Its impact has rippled through the recession-hit economy, as well as to the rest of the world.

The strongest government action yet to aid homeowners since

the housing market's meltdown began is targeting just the rightareas, Case said.

President Barack Obama last week announced a plan to back refinancing for reliable borrowers; help distressed borrowers avoid foreclosure; and stimulate new housing demand through the expansion of housing finance giants, Fannie Mae and Freddie Mac. Case said if he were to grade the housing plan he would give it an "A."

"While it does not have a high likelihood of making a big difference, it does have a high likelihood of making some difference and that is exactly the right thing to do," he said.

Foreclosure sales have dragged overall home prices down. But fewer foreclosures help assuage one of the housing market's biggest banes which is a huge supply of unsold homes.

"In six months we will probably begin to see something happen in the pipeline of foreclosures and any impact that may have on home prices," Case said.

(Additional Reporting by Al Yoon)