US house prices fell at their fastest rate in more than two decades during the third quarter, according to a measure of house prices released yesterday and widely followed by investors, Financial Tiems, The Times, Independent

The S&P/Case-Shiller index suggests that house prices nationwide fell 1.7% in the three months to October from the second quarter and were down 4.5% year on year. Prices in 20 big cities were down on average by 4.9% year on year.

Meanwhile,Global Insight forecast US house prices declining by 7% nationwide next year with a 15 % decline in California, the nation’s biggest housing market.

The report warned that US cities, particularly in California and Florida, would suffer sharp falls in revenues from property taxes.

Goldman Sachs, meanwhile, released a report arguing that even if the US economy stayed out of recession, house prices would fall by 7% in both 2008 and 2009, for a total decline from peak to trough of 15%.

The investment bank said that if the economy went into recession, 'the decline in house prices could be as large as 30%'.