* Dalian iron ore tracks steel losses, hits weakest since July
* China home prices rise again in Aug
* Some Chinese cities restrict home buys
By Manolo Serapio Jr
MANILA, Sept 19 (Reuters) - Chinese steel prices dropped to their lowest in nearly three months on Monday on worries that fresh efforts to curb home purchases could slow demand in the top global steel consumer.
Financial markets reopened in the country on Monday after closing on Thursday and Friday for China's Mid-Autumn Festival.
Home prices there rose at a faster pace in August, data showed, with the buying frenzy spilling over from first-tier cities to other parts of the country. Second- and third-tier cities such as Xiamen, Nanjing and Wuhan are now stepping up measures to cool overheated markets. authorities from the eastern city of Hangzhou announced on Sunday it will begin to restrict home purchases from Sept. 19. Families who are not registered as residents and already own one or more houses in certain districts will not be able to purchase another home, new or pre-owned. most-traded rebar on the Shanghai Futures Exchange SRBcv1 touched a session low of 2,190 yuan ($328) a tonne, the weakest since June 29. The construction steel product was down 1 percent at 2,237 yuan by midday.
"The supply of steel is quite big and demand is at risk because of the new restrictions on real estate purchases," said a Shanghai-based iron ore trader.
"This will affect new property projects and eventually it will affect demand for steel."
A surge in Chinese steel prices spurred by Beijing's efforts to stimulate the economy caused domestic crude steel output to rise for a sixth straight month in August. decline in China's steel prices in September came after a three-month gain.
Tracking losses in steel, raw material iron ore traded on the Dalian Commodity Exchange DCIOcv1 was last down 0.6 percent at 390.50 yuan a tonne. It fell as far as 383 yuan, the lowest since July 26.
Spot iron ore prices were flat on Thursday and Friday owing to the Chinese holidays.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI was unchanged at $55.50 a tonne on Friday, according to The Steel Index.
The spot benchmark has slid 10 percent since touching a 3-1/2-month peak of $61.80 on Aug. 16. ($1 = 6.6688 Chinese yuan)