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Freddie Mac study: Home prices rise 0.9 percent in Q3 of '09

NationalMortgageProfessional.com
Dec 08, 2009

Freddie Mac has announced that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 0.9 percent quarterly gain (3.8 percent annualized) during the third quarter 2009 for the U.S., following an upward revised 2.0 percent pickup (8.2 percent annualized) in the second quarter and marking the second consecutive quarter of price increase. The increases of the past two quarters erased about two-fifths of the declines registered during the final quarter of 2008 and the first quarter of 2009; over the year ending with the third quarter of 2009, U.S. home sales prices were down 3.9 percent in the CMHPI Purchase-Only Series. “The home-price gains of the past two quarters reflect improving existing home sales over that period. Sales volume was up 15 percent between the first and third quarters of this year,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The lowest average fixed-rate mortgage rates in a half century, lower house prices, incentives to encourage first-time buyers, and loan modification efforts to stem foreclosures have worked together to support sales and reduce the inventory of unsold homes. Moreover, the price gains were broad-based with increases in seven of nine regions during the third quarter and all nine regions up from their first quarter values. “Prices are still down relative to their peaks in most markets. For example, as measured by the CMHPI, values in the New England, East North Central and Pacific divisions are at 2004 levels, on average, and the South Atlantic, West North Central, and Mountain states’ home values are at 2005 levels. In contrast, average values in the West South Central area have tied their previous peak from the third quarter of 2008, while average home values in the Middle Atlantic and East South Central states have reached 2006 and 2007 levels, respectively. ” 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 average U.S. home values fell 2.1 percent (-8.1 percent annualized) during the third quarter and depreciated 4.0 percent over the year ending with the third quarter of 2009. The CMHPI Purchase-Only Series had the following regional house-price changes: ► Pacific Division (AK, CA, HI, OR, WA): jumped up 3.9 percent (16.7 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 6.9 percent, and during the last five years, home values have decreased 4.3 percent. ► Middle Atlantic Division (NJ, NY, PA): increased 1.1 percent (4.5 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 2.5 percent, and during the last five years, home values increased 16.2 percent. ► South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): rose 0.6 percent (2.6 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 5.0 percent, and during the last five years, home values increased 7.9 percent. ► West North Central Division (IA, KS, MN, MO, ND, NE, SD): increased 0.5 percent (2.0, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 1.1 percent; over the last five years, home values increased 5.2 percent. ► East South Central Division (AL, KY, MS, TN): increased 0.2 percent (0.6 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 1.4 percent, and during the last five years, home values increased 15.4 percent. ► East North Central Division (IL, IN, MI, OH, WI): rose 0.2 percent (0.6 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 2.7 percent, and during the last five years, home values decreased 2.5 percent. ► West South Central Division (AR, LA, OK, TX): grew 0.1 percent (0.5 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values were unchanged, and during the last five years, home values increased 20.5 percent. ► Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): decreased 0.6 percent (-2.5 percent, annualized) in the third quarter of 2009. In the last 12 months, home values decreased 9.3 percent; during the last five years, home values increased 7.7 percent. ► New England Division (CT, MA, ME, NH, RI, VT): declined 0.7 percent (-2.6 percent, annualized) in the third quarter of 2009. Over the last 12 months, home values decreased 2.4 percent, and during the last five years, home values declined 1.7 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 41 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 2009 and purchased by Freddie Mac or Fannie Mae by Oct. 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. For more information, visit www.freddiemac.com.
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