US home prices posted a record annual decline of 16.3 per cent in July, disappointing economists and delivering the latest setback to the search for signs of recovery in the US housing market.

According to the closely watched Case-Shiller index, produced by Standard & Poor’s and released on Tuesday, home prices in 20 large US cities fell faster than both the 16 per cent drop expected by most economists and the previous record of 15.9 per cent in June.