US house prices recorded their biggest monthly gain in four years in July, raising hopes that residential property has bottomed out after the biggest decline in the market in more than half a century.

House prices rose 1.6% from June to July, the third consecutive monthly increase, according to the closely watched S&P/Case-Shiller index. The figures were better than economists predicted, with 18 out of 20 US cities reporting monthly gains.

Compared with a year ago, house prices were down 13.3%, the smallest year-on-year drop in 17 months. They are now back to levels last seen in 2003 and are off their 2006 peak by 32.6%.

'These figures continue to support an indication of stabilisation in national real estate values but we do need to be cautious in coming months,' said David Blitzer, chairman of the Standard & Poor’s index committee, which publishes the report.

Financial Times