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Study Finds US Housing Prices Continuing to Fall

A new report says U.S. home prices continued to fall in August, declining five percent over the past year.

Tuesday's report from Standard & Poors and Case-Shiller tracks home prices in cities across the United States.

The housing sector's problems have been made worse by defaults among subprime borrowers. That has prompted investors to avoid lending even to well-qualified borrowers.

Economists tell journalists that they are worried falling home prices will make homeowners curb spending. Consumer demand drives about two-thirds of U.S. economic activity, so declining consumer spending raises the risk of recession.

The risk of a shrinking economy is one of many things that top officials from the U.S. central bank, known as the Federal Reserve, are considering as they decide whether to cut interest rates to boost the economy.

They are scheduled to announce a decision on Wednesday.

Some information for this report was provided by AFP, AP and Reuters.