Lender Processing Services Inc. (LPS) has announced that its LPS Applied Analytics division has updated its home price index (LPS HPI) with residential sales concluded during November 2011. The LPS HPI summarizes home price trends nationwide by tracking sales each month in more than 13,500 ZIP codes. Within each ZIP code, the LPS HPI tracks five price levels from low to high.
"Since the post-bubble drop in home prices eased in January of 2009, we've generally seen that prices for homes in the lowest 20 percent of local markets in the metropolitan areas covered by the LPS HPI now differ by more than the highest 20 percent from their levels 10 years ago," said Kyle Lundstedt, managing director of LPS Applied Analytics. "In those metropolitan areas where lowest-priced homes have increased in value, the differences between the high and low ends of the market have usually shrunk; where they have decreased in value, the differences have grown."
The LPS HPI national average home price for transactions during November 2011 was $199,000—a decline of 0.6 percent during the month relative to October 2011, reaching a price level not seen since October 2002 (see chart below). This is the fifth consecutive month of price decreases. The partial data available for December suggests further price declines of approximately 0.8 percent.
LPS reported partial data from November transactions in its December release, which proved a reasonable indicator for November's performance showing a preliminary 0.5 percent estimated decline, compared to the 0.6 percent for the full month's data.
LPS HPI average national home prices continue the downward trend begun after the market peak in June 2006, when the total value of U.S. housing inventory covered by the LPS HPI stood at $10.8 trillion. Since that peak, the value has declined 30.6 percent to $7.5 trillion. During the period of most rapid price declines, from June 2007 through December 2008, the LPS HPI national average home price dropped $56,000 from $282,000, which corresponds to an average annual decline of 13.8 percent.
Since December 2008, prices have fallen more slowly, interrupted by brief seasonal intervals of rising prices. During this period of more slowly declining prices, the national average home price has fallen approximately $26,000 from $226,000.
The November national average price is down 3.4 percent from the average price at the beginning of the year. Home prices in November were consistent with the seasonal pattern that has been occurring since 2009. Each year, prices have risen in the spring, but have reverted in autumn to a downward trend that has not only erased the gains, but has led to an average 4.4 percent annual drop in prices to date. The national average home price has declined 4.8 percent over the most recent year to November 2011.
Price changes were largely consistent across the country during November, increasing in 13 percent of the ZIP codes in the LPS HPI. Higher-priced homes had somewhat smaller declines: 0.55 percent for the top 20 percent of homes (prices above $311,000), compared to 0.60 percent for the bottom 20 percent (below $100,000). The highest-priced homes, the top one percent (prices above $839,000), declined 0.47 percent.
Changes during October were also largely consistent among metropolitan statistical areas (MSAs). Of the 409 MSAs the LPS HPI covers, average prices declined for all of the MSAs (316) in 41 states, a reduction from October's 352 MSAs in 43 states. In addition, while average prices did not decline for all MSAs in the remaining states, 380 MSAs out of the total 409 saw prices fall, also a reduction from October's 403 MSAs.
Twenty of the MSAs with average price increases were in Florida, with the remainder in Arizona, Tennessee and New York. Phoenix was the best-performing MSA, as it was in October, with an increase during November of 1.1 percent. The other four of the top five MSAs with increases (greater than 0.6 percent) were in Fort Lauderdale, Miami and Orlando, Fla. and in Lake Havasu City-Kingman, Ariz.
The five MSAs with the greatest declines in November were all in Georgia. Columbus, Macon, Gainesville and Augusta (in addition to Atlanta) declined more than two percent. MSAs that declined more than 1.5 percent were on the "Middle Coast," in Chicago; Lake County, Ill.; and Kenosha County, Wis. One hundred and five MSAs declined more than one percent.
Twenty-three of the 26 large MSAs covered by both the LPS HPI and Bureau of Labor Statistics economic data had average prices decline during November. Compared to the beginning of the year, average home price changes in these MSAs split nearly three-to-one between declines and increases, with seven of the MSAs having price increases.
The largest declines were in Atlanta (-22.8 percent) and on the West and Middle Coasts: At the end of November average home prices in Los Angeles, San Diego, San Francisco and Seattle were all more than 5.4 percent below their January 2011 levels. Chicago and Milwaukee were both more than 5.5 percent down.
Among the largest MSAs, the greatest LPS HPI average home price increases since the beginning of the year have occurred in Detroit (5.8 percent) and Pittsburgh (two percent). Over the past year, however, only three of the largest MSAs—Detroit, Pittsburgh and Miami—have seen average home prices increase (4.4, 1.1 and 0.5 percent, respectively). Pittsburgh is the only MSA that, with seasonal variations, has seen its average price rise continuously since January 2005. Its most recent seasonal peak price occurred in July of this year. Five of the largest MSAs have average home prices below what they were at the end of January 2000: Detroit, Atlanta, Cleveland, Phoenix and Chicago (-44.4, -31.0, -10.2, -6.7, and -1.0 percent, respectively).
