US house prices fell by a record 15.8 per cent in May, according to data released yesterday, offering scant hope that the ¬ailing US housing industry could be on the path to recovery.

The Standard & Poor’s Case-Shiller index showed home prices declining over the year in all of the 20 large US cities surveyed, with the worst drop – 28.4 per cent – in Las Vegas, and the most modest decline – 0.2 per cent – coming in Charlotte, North Carolina.

Although the overall figure was slightly better than expected by most economists, it marked the steepest fall since the index was created eight years ago and a faster one than the 15.3 per cent drop reported in April.

It appeared to confirm the view of many economists that turmoil in the US housing market is likely to last until next year, with further house price declines to come.

“House prices will continue to drop because inventories of unsold homes remain high,” said Patrick Newport, US economist at Global Insight. “Recent progress on reducing inventories has been modest. This is bad news because inven¬tories need to come down considerably for the housing market to equilibrate.”

There was some room for optimism in the index on a monthly basis. House prices dropped by 0.9 per cent between April and May – a slower pace than the 1.4 per cent decrease between March and April and that of 2.2 per cent between February and March.