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Freddie Mac report: National home price decline decelrated in first quarter

NationalMortgageProfessional.com
May 28, 2009

Freddie Mac has announced that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 5.3 percent annualized decline in U.S. house prices during the first quarter of 2009, following a downward revised 18.5 percent annualized drop in the fourth quarter. Over the year ending with the first quarter of 2009, U.S. home sales prices fell 8.4 percent in the CMHPI Purchase-Only Series – less than the 9.7 percent annual decline recorded between the fourth quarter of 2007 and the fourth quarter of 2008. “The improvement in house-price change from a steep decline to a more moderate one is consistent with other housing market data that point to the highest level of home-purchase affordability in at least 40 years and a stabilization in existing home sales and single-family construction in the first quarter, albeit at low levels of activity,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This pattern was consistent across all nine regions of the U.S., with the rate of depreciation lessening in seven regions, and switching to modest appreciation in New England and the East North Central states. “Local markets that currently experience high levels of vacant-for-sale homes will continue to experience declines in prices over the coming year. This will likely cause some further decline in the CMHPI Purchase-Only series for the U.S. over several more quarters. Nonetheless, it is important to realize that some local markets will experience stable or modestly rising prices even though the national metric may decline.” The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series that includes data from both home purchase transactions and mortgage refinancings, with the latter values based on appraisals. Generally, because appraisals are backwards looking through the use of recent comparable property transactions, the Classic Series will typically lag changes in the Purchase-Only series. The CMHPI Classic Series indicated that over the year ending with the first quarter, home values depreciated 4.0 percent in the U.S. measure, less than the 5.3 percent decline over the year ending in the fourth quarter of 2008. The CMHPI Purchase-Only Series had the following regional house-price changes: New England Division (CT, MA, ME, NH, RI, VT): rose 0.8 percent (3.4 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 3.3 percent, and during the last five years, home values increased 6.3 percent. East North Central Division (IL, IN, MI, OH, WI): rose 0.5 percent (1.9 percent, annualized) in the first quarter of 2009. Over the last 12 months, home values decreased 3.9 percent, and during the last five years, home values decreased 0.4 percent. South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): fell 0.3 percent (–1.3 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 9.6 percent, and during the last five years, home values increased 13.1 percent. West South Central Division (AR, LA, OK, TX): dipped 0.7 percent (–2.7 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 0.5 percent, and during the last five years, home values increased 21.4 percent. East South Central Division (AL, KY, MS, TN): fell 0.8 percent (–3.1 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 2.8 percent, and during the last five years, home values increased 17.6 percent. West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 0.9 percent (–3.4 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 2.8 percent; over the last five years, home values increased 6.7 percent. Middle Atlantic Division (NJ, NY, PA): decreased 1.5 percent (–5.8 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 4.6 percent, and during the last five years, home values increased 22.1 percent. Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): declined 4.0 percent (–15.0 percent, annualized) in the first quarter of 2008. In the last 12 months, home values decreased 12.0 percent; during the last five years, home values increased 16.0 percent. Pacific Division (AK, CA, HI, OR, WA): decreased 4.7 percent (–17.4 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 21.2 percent, and during the last five years, home values have decreased 4.9 percent. Unlike other home price indexes based on mean or median values of homes sold during a given period, the Conventional Mortgage Home Price Index is constructed, using regression techniques, from observations of actual sales prices or appraised values of the same homes over time. The street addresses of properties that serve as collateral for mortgages funded by the two secondary mortgage market firms are processed using software certified by the United States Postal Service to create a uniform address format and are then matched to identify consecutive transactions on the same property. There are currently more than 40.3 million records in the repeat-transactions database used to construct the classic Conventional Mortgage Home Price Index – this database includes transactions on one-unit detached and single-family townhome properties serving as collateral on loans originated through the first quarter of 2009 and purchased by Freddie Mac and Fannie Mae by March 31, 2009. Freddie Mac publishes the Conventional Mortgage Home Price Index each quarter. Index values and growth rates for the nation as a whole as well as for the nine Census divisions, the 50 states and the District of Columbia, and 392 metropolitan statistical areas (MSAs) and metropolitan divisions under the classic series of the CMHPI are available and the purchase-transaction only series is available for the nation and nine Census divisions. All of the CMHPI series can be found on Freddie Mac’s web site, www.freddiemac.com/finance/cmhpi/.   For more information, visit www.freddimac.com.  
Published
May 28, 2009
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