In a nutshell, U.S. home prices in general are still falling at an astronomical rate, but some areas have seen the rate of decrease moderate in recent months -- an effect that may be seasonality, may be the start of more sustained price declines (compared to accelerated price declines), or may reflect purchase activity at the lower price points and among deeply-discounted foreclosure properties now flooding many key local housing markets. Case in point: U.S. home prices fell a record 15.4 percent during the second quarter of 2008, according to the S&P/Case-Shiller national home price index released Tuesday morning by Standard & Poor's. That's a steeper decline that the 14.2 percent recorded in the first quarter, although S&P noted that the "acceleration in decline was only moderate in June." The 10-City and 20-City Composites also set new records, with annual declines of 17.0 percent and 15.9 percent, respectively, during June. While records, the June totals are close to the declines recorded during May, S&P said. "While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level," said David Blitzer, chairman of the index committee at Standard & Poor's. "Depending on where you focus on the details of the report, you can see some different stories on where home prices are headed." For the month, the 10-City composite was down 0.6 percent and the 20-City Composite was down 0.5 percent; while still falling, Blitzer said the declines were "far less than the 2-2.5 percent monthly drops seen earlier in 2008." In June, nine of the 20 cities were up month-to-month, compared with seven in May. Nevertheless, no market is showing a positive return over the past 12 months, and seven of the metro areas are reporting declines in excess of 20 percent -- in other words, while the pace of price declines may be moderating for various reasons, the fact that prices are still declining has not changed. Since the peak of the national housing market roughly two years ago, the 10-City composite has fallen by 20.3 percent and the 20-City composite is down 18.8 percent. Las Vegas remains the weakest market, reporting an annual decline of 28.6 percent, followed by Miami and Phoenix at 28.3 percent and 27.9 percent, respectively. Phoenix was the worst performer for the June to May period, returning a loss of 2.6 percent, S&P said. On the plus side, Denver and Boston were the best performing markets for the month, returning 1.5 percent and 1.2 percent, respectively; both markets have had three consecutive months of positive returns. So which of the three scenarios outlined at the outset is it? At this point, it's too early to tell, although some groups have been quick to jump on the trend as evidence supporting their own particular agenda. Our own guess at HW is that we're seeing a small seasonal effect, combined with a strong REO effect in some of the hardest-hit local markets to date. REO agents we've spoken to in California's Inland Empire have suggested to us that their listings are moving, relatively speaking, while retail listings are still sitting unsold; beyond that, early surveillance on recent mortgage vintages is showing a strong uptick in borrower delinquencies and defaults starting with July's data. The early uptick is telling because it's coming one to two months earlier than seasonal trends would typically dictate. Extrapolating this to the larger housing market, it suggests that any seasonal bump seen in the primary market will likely be short-lived. Here's hoping we're wrong. Related links: full S&P/Case-Shiller report