National home prices dropped 8.9 percent in the last quarter of 2007 as compared to the same period a year ago. This was based on the latest S&P/Case Shiller Home Prices Indices released last Tuesday. The decline was the sharpest since the housing index was started 20 years ago.

The indices include a quarterly index for annual returns of the U.S. National Home Price Index, the 10-City Composite, and the 20-City Composite which shows all three still yielding negative returns.

The 10-city index also set a record annual drop of 9.8 percent in December, while the 20-city index dipped 9.1 percent.

Home prices also plunged 5.4 percent from the previous quarter, by far the largest quarter-to-quarter price weakening in the index’s history. The record was the revised 1.8 percent drop set in the third quarter of the same year.

“We reached a somber year-end for the housing market in 2007,” said one of the index’s creators Robert Shiller. “Home prices across the nation and in most metro areas are significantly lower than where they were a year ago. Wherever you look, things look bleak.”

A report by the Office of Federal Housing Enterprise Oversight last Tuesday said U.S. home prices recorded their first annual decline in 16 years. The said nationwide prices declined 0.3 percent in the fourth quarter compared to the same period a year ago.

“It will only get worse. This record will be shattered by subsequent declines,” said Peter Schiff, author of “Crash Proof: How to Profit from the Coming Economic Collapse” about the S&P/Case-Shiller report. “We will experience the most substantial decline in history because before this we had experienced the most unprecedented rise in U.S. real estate history.”