NEW YORK (CNNMoney.com) -- The market seems to have pulled the rug out from under housing industry hopes for a sustained early recovery.
After a five-month run-up in home prices starting last spring, prices have now fallen for four consecutive months, according to the S&P/Case-Shiller Home Price Index of 20 cities, a gauge of market values, released Tuesday.
In January, prices were down 0.4%, compared with December and have fallen 0.7% from a year earlier.
"The rebound in housing prices seen last fall is fading," said David Blitzer, chairman of the Index Committee at Standard & Poor's. "Fewer cities experienced month-to-month gains in January."
Buoyed by the government's program of tax credits for first-time buyers, home prices had come 5.4% off their low set last April. Since the impact of the credit crunch started to fade last fall, prices have flopped again, down about 1% since September.
"People rushed to beat the tax credit deadline," said Richard DeKaser, a housing market analyst.
That exhausted the supply of bargain hunters. Even after the credit was extended, there were fewer potential buyers because so many had moved up their purchases.
Blitzer pointed to other housing data that also suggests weakness in the market.
"Housing starts continue at extremely low levels, recent reports of home sales suggest the market remains difficult, and concerns remain about further foreclosures and a large shadow inventory of unsold homes," he said. "We can't say we're out of the woods yet."
DeKaser said he believes that banks will start to ease their restrictions on mortgage lending over the next several months, which should boost markets. Underwriting standards are so tight right now that many people who would be buying homes cannot because they can't obtain a mortgage.
The tax credit helped offset that market weakness but when it expires at this month - contracts have to be signed by the end of April and sales closed before July 1 - the lenders will have to step up.
"If lenders don't return to the market, we could experience another letdown in the housing market," he said.
Only two cities recorded home price gains in January: Los Angeles prices rose 0.9% and San Diego gained 0.4%.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.09%||4.03%|
|15 yr fixed||3.25%||3.18%|
|30 yr refi||4.12%||4.07%|
|15 yr refi||3.29%||3.19%|
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