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First American CoreLogic study: Prices continue decline but rate of decline improves

Nov 20, 2009

National home prices, including distressed sales, declined by -9.8 percent in September 2009 compared to September 2008, according to First American CoreLogic and its LoanPerformance Home Price Index (HPI). This was an improvement over August’s year-over-year price decline of -11.1 percent. On a month-over-month basis, however, national home prices declined by -0.4 percent in September 2009 compared to August 2009, reversing a five-month trend of positive appreciation. The August-to-September decline suggests the return of seasonal housing price patterns. Excluding distressed sales, year-over-year prices declined in September by -6.0 percent (in August non-distressed sales fell by -6.2 percent year-over-year). This underscores the negative impact that distressed sales have on the HPI, as distressed sales continue to decline at a larger annual rate than non-distressed sales. Forecast shows rebound in spring The new First American CoreLogic HPI Forecast anticipates continued declines in most markets, albeit at a slowing rate, for the next six months, followed by a rebound in the spring. Above-average levels of foreclosures, inventories and unemployment will continue to take their toll in many major metropolitan markets in the short term. As the economy continues to improve and these factors improve, the forecast calls for housing prices to bottom for most markets by March 2010 and then turn positive. This would yield the first positive year-over-year house price appreciation since the beginning of 2007. In September 2009, the forecast is projecting that 12-month appreciation for national home prices, excluding distressed, will be 1.1 percent, bringing price levels for that segment of the market back to levels in May 2004. The 12-month forecast is more negative now than in August as a result of recent increases in the unemployment rate. Highlights as of September 2009: ► Including distressed transactions, the HPI has fallen -29.9 percent from its peak in April 2006. Excluding distressed properties, the national HPI has fallen -20.9 percent from the same peak. ► When distressed sales were included Nevada (-25.5 percent) remained the top-ranked state for annual price depreciation with Arizona following close behind (-20.3 percent). Florida (-17.7 percent), Michigan (-15.1 percent) and Idaho (-14.9 percent) round out the top five states for price declines. All five of these states also showed month-over-month decreases in their HPI. ► Excluding distressed sales, the worst five states for year-over-year price declines changes slightly. Nevada (-20.4 percent) still holds the top spot, followed by Arizona (-15.4 percent), Florida (-14.8 percent), Idaho (-10.9 percent) and Washington (-10.3 percent). “We have now seen a return of more traditional seasonal patterns with the slight decrease in our month-over-month HPI for September,” said Mark Fleming, chief economist for First American CoreLogic. “While the improvement in the year-over-year decline is encouraging, high foreclosure rates and increasing distressed sales are likely to continue to hold prices down,” he said. For more information, visit  
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