Home price declines now being observed in many housing markets reflect a historically-recurring mid-summer lull and the sometimes-extreme pressure being exerted on many markets by a growing number of foreclosures, according to data released Thursday by Radar Logic Inc., a New York-based data and real estate analytics firm. The company publishes price-per-square-foot data used as the basis for the Residential Property Index, or RPX market, a futures trading instrument used by many hedge funds and institutional investors to hedge their mortgage-related bets. The RPX in particular has become a popular source of hedging for distressed mortgage investors purchasing whole loans. Twenty-four MSAs of the 25 captured in Radar Logic's data showed an annual price decline during July; Milwaukee reported the only yearly gain in prices. The highest price declines -- not surprisingly -- appeared in California, southwestern states including Arizona and Nevada, and several areas in Florida. The single largest price decline occurred in Las Vegas, where the price per square foot has fallen a whipping 33.4 percent during the past year. Areas with the most severe price declines overall were largely affected by foreclosures, according to the report; Radar Logic's data suggest that as foreclosures increase, home prices declines intensify. "On one hand, there is the traditional market process in which sellers and buyers negotiate a price and sellers frequently prefer to wait rather than significantly lower their asking price," said Radar Logic CEO Michael Feder in a media statement. "On the other hand, there is the foreclosure sale process in which homeowners, banks and other financial institutions are motivated to sell quickly, so they discount their prices to effect a transaction." The result has been a strong bifurcation of pricing in many key markets, especially as the inventory of distressed and REO properties has grown. Los Angeles provides a prime example, where 34.3 percent of all sales in the MSA represented so-called "motivated sales, a 578.2 percent increase from levels seen last year. Radar Logic's data suggests that distressed real estate sales in Los Angeles average less that $250 per square foot, while regular retail transactions remain north of $300 per square foot. Expert suggest that as REO inventory continues to swell, more traditional sellers will find it increasingly difficult to demand such higher prices relative to bank-owned real estate. PMI Mortgage Insurance Co. also weighed in on the home price declines earlier this week. PMI's quarterly risk index, which uses data from the Office of Federal Housing Enterprise Oversight/Federal Housing Finance Agency to calculate the risk of future home price declines, suggested that the risk of price declines actually grew during the second quarter, largely due to the foreclosure effect. “The majority of these increases [in PMI's risk measure] aren’t statistically significant,” said PMI economist and strategist David Berson in a media statement Wednesday. However, the increases were significant in states “where foreclosures and unemployment increased significantly.” With contributions from Paul Jackson. To contact the reporter on this story, email diana.golobay@housingwire.com.