Freddie Mac CMHPI: National home value drop accelerates in Q3MortgagePress.comFreddie Mac, CMHPI, Conventional Mortgage Home Price Index, housing demand
Freddie Mac announced that its Conventional Mortgage Home Price
Index (CMHPI) Purchase-Only Series registered a 7.3 percent
annualized decline in U.S. house prices during the third quarter of
2008, following a downward revised 0.9 percent annualized drop in
the second quarter. Over the four quarters ending with the third
quarter of 2008, home sales prices fell an average of 7.2 percent
in the CMHPI Purchase-Only Series, the largest annual fall in
values over the 39-year history of the series.
"The disruptions in the credit markets during the latter part of
the third quarter have likely weakened housing demand and
contributed to further declines in house prices," said Frank
Nothaft, Freddie Mac vice president and chief economist. "With the
unemployment rate having risen to 6.5 percent in October, there
will likely be further weakening in housing demand, which could
push the market bottom in home sales and housing starts out at
least until middle to late next year and result in further declines
in house prices. Our November forecast has the CMHPI purchase-only
index declining 4.3 percent over the course of 2009.
"For the first time in the CMHPI series we saw every region of
the nation experience declining home values over the quarter. There
is significant variation in the degree of the declines, ranging
from a very small 0.1 percent annualized drop in values in the West
South Central region to a 20 percent annualized loss in home values
in Pacific states. Some areas have been fortunate not to feel the
full sting of the credit crunch or the foreclosure storm, but
unfortunately they are no longer immune from the effects of falling
home values."
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
lag changes in the Purchase-Only series when the market reaches a
peak or trough turning point. The CMHPI Classic Series indicated
that home values fell 11.9 percent nationally during the third
quarter on an annualized basis, the steepest quarterly decline
since the index began in 1970. Over the year ending with the third
quarter, home values depreciated 5.6 percent on average in the
Classic Series, the sharpest annual drop in this index over the 39
years spanned by the series.
Seventeen states registered modest price gains over the past
year, and five states had increases in the third quarter, according
to the CMHPI Classic Series. Annual price gains of two percent to
four percent occurred in Alabama, North Carolina, North Dakota,
Oklahoma, South Carolina, South Dakota, and Texas, which have
benefited from stronger local economies led in part by the
petroleum, natural gas and ethanol industries. Annual drops of more
than 14 percent occurred in Arizona, California, Florida and
Nevada, which have borne the brunt of the housing market woes.
The Conventional Mortgage Home Price Index (Purchase-Only)
Series shows the following regional performances:
West South Central Division (AR, LA, OK, TX):
dipped 0.03 percent (0.1 percent, annualized) in the third quarter
of 2008. Over the last 12 months, home values increased 0.5
percent, and during the last five years, home values increased 25.9
percent.
Middle Atlantic Division (NJ, NY, PA):
decreased 0.1 percent (0.3 percent, annualized) in the third
quarter of 2008. Over the last 12 months, home values decreased 2.2
percent, and during the last five years, home values increased 33.4
percent.
West North Central Division (IA, KS, MN, MO, ND, NE,
SD): decreased 0.5 percent (1.8 percent, annualized) in
the third quarter of 2008. Over the last 12 months, home values
decreased 2.6 percent; over the last five years, home values
increased 12.7 percent.
East South Central Division (AL, KY, MS, TN):
fell 1.1 percent (4.2 percent, annualized) in the third quarter of
2008. Over the last 12 months, home values decreased 1.3 percent,
and during the last five years, home values increased 23.6
percent.
New England Division (CT, MA, ME, NH, RI, VT):
dropped 1.1 percent (4.2 percent, annualized) in the third quarter
of 2008. Over the last 12 months, home values decreased 5.1
percent, and during the last five years, home values increased 13.9
percent.
East North Central Division (IL, IN, MI, OH,
WI): decreased 1.2 percent (4.6 percent, annualized) in
the third quarter of 2008. Over the last 12 months, home values
decreased 3.9 percent, and during the last five years, home values
increased 5.7 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA,
WV): fell 2.1 percent (8.1 percent, annualized) in the
third quarter of 2008. Over the last 12 months, home values
decreased 6.8 percent, and during the last five years, home values
increased 27.6 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT,
WY): declined 2.3 percent (8.9 percent, annualized) in the
third quarter of 2008. In the last 12 months, home values decreased
7.6 percent; during the last five years, home values increased 33.1
percent.
Pacific Division (AK, CA, HI, OR, WA):
decreased 5.4 percent (19.9 percent, annualized) in the third
quarter of 2008. Over the last 12 months, home values decreased
20.2 percent, and during the last five years, home values have
increased 18.0 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 second 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 36.6 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
third quarter of 2008 and purchased by Freddie Mac and Fannie Mae
by Oct. 31, 2008.
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 Macs web site, www.freddiemac.com/finance/cmhpi/.
For more information, visit www.FreddieMac.com.
