Freddie Mac CMHPI: National home value drop accelerated in the fourth quarterMortgagePress.comFreddie Mac, Conventional Mortgage Home Price Index, Frank Nothaft
Freddie Mac has announced that its Conventional Mortgage Home
Price Index (CMHPI) Purchase-Only Series registered a 17.9 percent
annualized decline in U.S. house prices during the fourth quarter
of 2008, following a downward revised 8.0 percent annualized drop
in the third quarter. Over the four quarters ending with the fourth
quarter of 2008, home sales prices fell an average of 9.5 percent
in the CMHPI Purchase-only Series--the largest annual decrease in
its 39-year history.
"The deepening recession and the large inventory of for-sale
homes continued to push home values down," said Frank Nothaft,
Freddie Mac vice president and chief economist. "While historically
low interest rates on long-term fixed-rate mortgages help the
housing market, demand for homes was weakened by rising
unemployment, wealth declines from declining stock market
valuations, and general lack of consumer confidence.
"For the second consecutive quarter in the CMHPI Purchase-only
series every region of the nation experienced flat or declining
home values over the quarter, but the fourth quarter of 2008 marks
the first time that year-over-year declines in home values were
recorded in each of the nine regions of the country. The range of
experience was wide, though, with the West South Central area
experiencing declines of one-tenth of one percent over the year
while the Pacific region had a decline of 23 percent."
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. The CMHPI Classic Series
indicated that home values fell 1.9 percent nationally during the
fourth quarter on an annualized basis, a significantly slower rate
than the revised third quarter decline of 11.5 percent. Over the
year ending with the fourth quarter, home values depreciated 6.0
percent on average in the Classic Series, the sharpest annual drop
in this index over the 39 years spanned by the series.
The Conventional Mortgage Home Price Index (Purchase-Only)
Series shows the following regional performances:
West South Central Division (AR, LA, OK,
TX)
Dipped 1.6 percent (6.4 percent, annualized) in the fourth quarter
of 2008. Over the last 12 months, home values decreased 0.1
percent, and during the last five years, home values increased 23.5
percent.
East South Central Division (AL, KY, MS,
TN)
Fell 2.3 percent (9.0 percent, annualized) in the fourth quarter of
2008. Over the last 12 months, home values decreased 2.7 percent,
and during the last five years, home values increased 19.8
percent.
Middle Atlantic Division (NJ, NY, PA)
Decreased 2.7 percent (10.3 percent, annualized) in the fourth
quarter of 2008. Over the last 12 months, home values decreased 4.1
percent, and during the last five years, home values increased 27.2
percent.
West North Central Division (IA, KS, MN, MO, ND, NE,
SD)
Decreased 3.0 percent (11.6 percent, annualized) in the fourth
quarter of 2008. Over the last 12 months, home values decreased 3.8
percent; over the last five years, home values increased 9.1
percent.
New England Division (CT, MA, ME, NH, RI,
VT)
Dropped 3.3 percent (12.5 percent, annualized) in the fourth
quarter of 2008. Over the last 12 months, home values decreased 6.6
percent, and during the last five years, home values increased 7.3
percent.
East North Central Division (IL, IN, MI, OH,
WI)
Decreased 4.9 percent (18.3 percent, annualized) in the fourth
quarter of 2008. Over the last 12 months, home values decreased 5.8
percent, and during the last five years, home values decreased 0.1
percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT,
WY)
Declined 5.0 percent (18.7 percent, annualized) in the fourth
quarter of 2008. In the last 12 months, home values decreased 9.2
percent; during the last five years, home values increased 24.6
percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA,
WV)
Fell 6.5 percent (23.5 percent, annualized) in the fourth quarter
of 2008. Over the last 12 months, home values decreased 11.4
percent, and during the last five years, home values increased 16.7
percent.
Pacific Division (AK, CA, HI, OR, WA)
Decreased 8.1 percent (28.5 percent, annualized) in the fourth
quarter of 2008. Over the last 12 months, home values decreased
23.0 percent, and during the last five years, home values have
increased 4.6 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 39.5 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
fourth quarter of 2008 and purchased by Freddie Mac and Fannie Mae
by Jan. 31, 2009.
For more information, visit www.freddiemac.com/finance/cmhpi.
