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Last Updated: Tuesday, 27 November 2007, 16:31 GMT
US house prices continue to slide
Home for sale in Miami
Prices are falling across the country, with Miami particularly hard hit
US house prices fell sharply in the three months to the end of September, a survey by S&P/Case-Shiller suggests.

Prices fell 4.5% in the quarter from the same period a year earlier and 1.7% from the previous quarter - the biggest quarterly drop in 21 years.

A crisis in the sub-prime market - where banks lent money to people with poor credit histories - has hit the housing market and financial sector.

Volatile markets and high oil prices have also hit consumer confidence.

Bleak outlook

Separate data from the Conference Board showed that consumer confidence fell to a two-year low of 87.3 in November, down from a revised 95.2 in October.

The November figure was the lowest since October 2005, in the aftermath of Hurricane Katrina.

Consumers' bleak outlook has been shaped by shaky financial markets and high oil prices said Lynn Franco, director of the Conference Board's consumer research centre.

"Apprehension about the short term outlook is being fuelled by volatility in the financial markets, rising prices at the pump and the likelihood of larger home heating bills this winter," she said. However consumers did expect to spend more on Christmas presents this year than they did last year, she added.

'No positive news'

There is little to cheer consumers in the S&P housing market report.

House prices are falling across the country, with Florida particularly hard hit, as banks reduce lending to riskier borrowers.

"Consistent with prior 2007 reports, there is no real positive news in today's data," said Robert Shiller, creator of the index.

Consumer spending accounts for two thirds of the US economy. Their lack of confidence and falling house prices have hit analysts' forecasts for economic growth.

Capital Economics analyst Paul Ashworth said that the data "supports our view that US GDP will contract over the final three months of this year and that falling house prices will constrain consumption and cause GDP growth to average only 1.7% next year,"

Economists say the risk of a US recession is rising

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