Home prices have fallen by more every month since the beginning of the year.

An index of 10 U.S. cities fell 4.5 percent in July from a year ago. That was the biggest drop since July 1991.

"The further deceleration in prices is still apparent across the majority of regions," MacroMarkets LLC Chief Economist Robert Shiller said in a statement.

A broader index of 20 cities fell 3.9 percent in July over last year, with 15 of 20 cities reporting that prices fell.

The five cities where prices are still rising -- Atlanta, Charlotte, N.C., Dallas, Portland and Seattle -- have reported growth is slowing in the past year. Atlanta and Dallas are close to moving into negative territory, S&P said.

Shiller, an economist at Yale University, told lawmakers in written comments last week that the loss of a boom mentality among consumers poses a "significant risk" of a recession within the next year.

His comments came a day after home buyers and other borrowers got some welcome news when the Federal Reserve cut a key interest rate by half a point to 4.75 percent. It was the Fed's first cut in four years.

The housing slowdown and decline in credit availability have triggered worries that the economy could go into a recession, spurring the Fed to act. Economists differ on whether the Fed will again cut rates during two meetings before year's end.

Yale University economist Robert Shiller's written comments to lawmakers came a day after the Federal Reserve responded to credit market turmoil by slashing the target federal funds rate by a half point to 4.75 percent.

Shiller, in testimony prepared for a hearing of the Joint Economic Committee said the loss of a boom mentality among the public may bring on a drop in consumer confidence that poses a "significant risk" of a recession within the next year.

Meanwhile, Peter Orszag, director of the Congressional Budget Office, gave a more tempered forecast, saying that financial market turmoil and weakened consumer confidence pose economic threats but are not likely to send the economy into a recession.

A hypothetical 20 percent drop in home prices over two years would reduce U.S. economic growth by one half of a percentage point annually to 1 1/2 percentage points annually after three years, the Congressional Budget Office calculates.

"The risk of recession is elevated but the most likely scenario at this point seems to be continued economic growth," Orszag said.

The hearing came as the government said Wednesday it would slightly raise the investment portfolio cap for government-sponsored mortgage companies Fannie Mae and Freddie Mac as a way to pump cash into the stretched mortgage market.

Since mortgages made to people with weak credit are concentrated among low-priced homes, Shiller said "low income people will be especially hard hit by the correction." He advocated the creation of a new federal commission, modeled after the Consumer Product Safety Commission, to detect abusive lending practices that critics say were common in the market for loans made to people with weak credit.

Recent readings of the housing market suggest a rebound isn't coming anytime soon.

The Commerce Department reported Wednesday that construction of new homes fell by 2.6 percent in August to the slowest pace in 12 years as troubles. On Tuesday, the National Association of Home Builders reported that its index of builder confidence fell in September to equal the lowest level on record.

Also, foreclosure filings in August more than doubled nationwide from the year-ago period and jumped 36 percent from July, research firm RealtyTrac Inc. said Tuesday.

The Fed announced Tuesday that it was reducing its target for the federal funds rate, the interest that banks charge each other, from 5.25 percent to 4.75 percent. The half-point reduction was double the quarter-point move that many economists had been expecting.

The action was designed to boost economic growth by lowering borrowing costs for millions of consumers and businesses. Commercial banks were expected to quickly match the Fed's action by cutting their prime lending rate. The prime rate has been at 8.25 percent for the past 15 months.

The Fed's action came in the midst of the worst slump in housing in 16 years. That downturn has triggered record defaults in subprime mortgages and roiled financial markets around the globe as investors have become worried about where the spreading credit problems will next appear.

The financial market turmoil represents the first major test for Fed Chairman Ben Bernanke, who took over from the venerable Alan Greenspan in February 2006.

In addition to cutting the federal funds rate by a half point, the central bank also reduced its discount rate, the interest it charges in making direct loans to banks, by a half-point as well.

The Fed had also cut the discount rate on Aug. 17 as it scrambled to respond to the growing credit crisis.

In explaining its action Tuesday, the Fed said that "the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally."