A new report (.pdf) from the Federal Housing Finance Agency made housing bulls shudder on Wednesday. Its indicated that prices fell 0.5% in July. It also revised downward June's dip to a 1.2% drop, instead of a 0.3% decline. This brought prices down to their September 2004 level.

Here's the chart:

It's pretty hard to argue that we're seeing significant stabilization here, particularly considering that sales are expected to be quite weak throughout the rest of 2010, while foreclosures will likely occur at relatively high levels. Until banks work through the large and increasing inventory of homes, prices will have trouble finding their footing.