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LPS: U.S. Home Prices Drop 1.2 Percent in September

Dec 06, 2011

Lender Processing Services Inc. (LPS) has announced that its LPS Applied Analytics division has updated its home price index (LPS HPI) with residential sales concluded during September 2011. The LPS HPI summarizes home price trends nationwide by tracking sales each month in more than 13,500 ZIP codes. Within each ZIP code, the LPS HPI tracks five price levels from low to high. “Home prices in September were consistent with the seasonal pattern that has been occurring since 2009,” said Kyle Lundstedt, managing director for LPS Applied Analytics. “Each year, prices have risen in the spring, but revert in autumn to a downward trend that has not only erased the gains, but has led to an average 3.7 percent annual drop in prices to date. The partial data available for October suggests a further approximate decline of 1.1 percent. Partial data from last month proved to be a good indicator for September's performance: It showed a preliminary 1.1 percent estimated decline, compared to the 1.2 percent as shown by the full month's data.” The LPS HPI national average home price for transactions during September was $202,000—a decline of 1.2 percent for the month. As in previous years, this decline follows a 0.9 percent decline during August (see below). The September national average price is down 1.8 percent from the average price at the beginning of the year. LPS HPI average national home prices continue the downward trend begun after the market peak in June 2006, when the total value of U.S. housing inventory covered by the LPS HPI stood at $10.6 trillion. The value has declined 30.2 percent since that peak to $7.56 trillion. During the period of most rapid price declines, from June 2007-December 2008, the LPS HPI national average home price dropped $56,000 from $282,000, which corresponds to an average annual decline of 13.8 percent. Since December 2008, prices have fallen more slowly, interrupted by brief seasonal intervals of rising prices. During this period of more slowly declining prices, the national average price has fallen approximately $24,000 from $226,000. This corresponds to an average annual decline of 3.7 percent. The national average home price has declined 4.4 percent over the most recent year to September 2011. Price changes were consistent across the country during September, declining in all ZIP codes in the LPS HPI. Higher-priced homes had somewhat smaller declines: -1.2 percent for the top 20 percent of homes (prices above $317,000), compared to -1.4 percent for the bottom 20 percent (below $102,000). Prices have fallen since autumn 2008 with brief interruptions each spring. Except for February of this year, prices have not been at the current level since January 2003. Price changes during September were consistent among all statistical areas (MSAs) in all states. Average prices declined together for the 436 MSAs covered by the LPS HPI. Furthermore, all five price levels in the LPS HPI also decreased for all MSAs. In particular, average prices declined during September in all of the 26 largest MSAs that both the LPS HPI and Bureau of Labor Statistics (BLS) economic data cover. Compared to the beginning of the year, average home price changes in the largest 26 MSAs have been nearly evenly split between declines and increases, with 12 of the MSAs having price increases. The largest declines have been in Atlanta and Phoenix. The largest increases have occurred in Detroit, Minneapolis, and Pittsburgh. Over the past year, however, only four of the largest MSAs—Detroit, Honolulu, Miami and Pittsburgh—have seen average home prices increase During September, prices increased for a negligible number of the price-location pairs in the LPS HPI. Among all of the MSAs that the LPS HPI covers, the best performers during September were mostly in New York. Most of the MSAs in this group were in upstate New York, with a few in Michigan, and one in Pittsfield, Mass. A majority of the worst-performing MSAs during September were in California or nearby Arizona and Nevada, all of which had prices drop a little less than two percent. The remaining worst-performing MSAs were in Colorado, Connecticut and Georgia. The largest MSA in this group was Los Angeles.
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