Single-family home prices continued in freefall in September and through the third quarter, according to the S&P/Case Shiller Home Price Index.

Standard & Poor's, which released the report for September and for the third quarter Tuesday morning, said the index posted a record 16.6% decline in the third quarter of 2008 versus the third quarter of 2007, down from 15.1% and 14.0% reported for the second and first quarters of the year, respectively.

The 10-City and 20-City Composite indices continue to set new records, with annual declines in September of 18.6% and 17.4%, respectively, compared to the same month last year.

"The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals." said David M.Blitzer, chairman of the Index Committee at S&P. "All three aggregate indices and 13 of the 20 metro areas are reporting new record rates of decline. Looking at the returns of the U.S. National Index, prices are back to where they were in early 2004."

As of September 2008, the 10-City Composite is down 23.4% from its peak, the 20-City Composite is down 21.8% and the National Composite is down 21.0%.

The sun belt continued to lead the declines, with Phoenix the weakest market with an annual decline of 31.9%. Las Vegas was down 31.3%, San Francisco down 29.5% and Miami, Los Angeles, and San Diego down 28.4%, 27.6% and 26.3%, respectively.

Among other big losers were Detroit, off 18.6%, Tampa, down 18.5%, and Washington, D.C., down 17.2%. Also posting double-digit declines were Minneapolis, down 14.4%, and Chicago, down 10.1%.

Posting single-digit year-over-year losses in September were Seattle, down 9.8%; Atlanta, down 9.5%; Portland, down 8.6%; New York, down 7.3%; Boston, down 5.7%; and Denver, down 5.4%.

Dallas and Charlotte fared the best in September in terms of relative year-over-year returns, with declines of 2.7% and 3.5%, respectively.However, both are at rates of decline lower than those reported in August¹s numbers. In addition, Charlotte also reported its largest monthly decline on record, down 1.3%. Cleveland was the one market that showed any improvement in its year-over-year returns reporting -6.4% compared to the -6.6% reported for August.

Separately, the government released its quarterly report on house prices, which has been renamed from the Office of Federal Housing Enterprise Oversight House Price Index (HPI) to the Federal Housing Finance Agency HPI.The report, which tracks only homes financed with loans that conform to federal FHA standards, said U.S. home prices fell 1.8% in the third quarter of 2008 from the previous quarter, greater than the 1.4% decline in the prior quarter and the largest in the purchase-only index's 17-year history. Over the past year, prices fell 6.0% between the third quarter of 2007 and the third quarter of 2008.

FHFA's all-transactions House Price Index (HPI), which includes data from home sales and appraisals for refinancings, showed more weakness over the latest quarter than the purchase-only index. The all-transactions HPI fell 2.7% in the latest quarter and was down 4.0 percent over the four-quarter period. The four-quarter decline was the largest four-quarter drop in the history of the index, which extends back to 1975.

"The impact of foreclosures and tightening credit conditions weighed heavily on house prices in the third quarter," said FHFA Director James B. Lockhart.