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Home Values Decline in Third Quarter

November 30, 2010

Home prices fell 1.9 percent from the second quarter of 2010 to the third quarter, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI).

The Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series for the United States also revealed U.S. home values fell 3.1 percent relative to the third quarter a year ago. Home values fell in eight of nine Census Divisions, rising only in the New England Division.

“Home sales in the third quarter declined from the second quarter, in part because of the expiration of the home-buyer tax credit,” said Amy Crews Cutts, Freddie Mac deputy chief economist. “Although sales rose in August and September, the net decline over the quarter was still large. We’re now seeing the effect of the sales slow-down in home purchase prices.”

The revised change in home values for the second quarter of 2010 is an increase of 2.8 percent (11.8 percent annualized) relative to the first quarter of 2009 and a decrease of 0.5 percent relative to the second quarter of 2009.

The CMHPI Classic Series, which includes data on both home purchase values and appraisals, indicated that average U.S. home values rose 1.4 percent (5.6 percent annualized) during the third quarter. Comparing the third quarter of 2010 with the third quarter of 2009, the Classic Series shows 1.0 percent depreciation.

“Distressed sales, including foreclosed properties and short sales, are still a big part of the market,” Cutts said. “The past three quarters we’ve seen encouraging numbers in delinquency trends as reported by the Mortgage Bankers Association, though the delinquency rates remain high. Our forecast is for economic conditions to continue to improve, which should lower delinquency rates further over the coming year and relieve some of the downward pressure on home prices.”

Regional Summary

The CMHPI Purchase-Only Series had the following regional house-price changes:

New England Division (CT, MA, ME, NH, RI, VT): increased 0.3 percent (1.1 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 0.5 percent, and during the last five years, home values declined 10.3 percent.

East South Central Division (AL, KY, MS, TN): fell 0.6 percent (-2.3 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 1.9 percent, and during the last five years, home values increased 5.6 percent.

Middle Atlantic Division (NJ, NY, PA): decreased 0.6 percent (2.5 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 0.6 percent, and during the last five years, home values increased 1.9 percent.

West South Central Division (AR, LA, OK, TX): fell 0.8 percent (-3.1 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values increased 0.2, and during the last five years, home values increased 13.6 percent.

East North Central Division (IL, IN, MI, OH, WI): fell 1.7 percent (-6.4 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 3.6 percent, and during the last five years, home values decreased 10.2 percent.

West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 1.7 percent (-6.7 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 1.9 percent; over the last five years, home values fell 2.2 percent.

Pacific Division (AK, CA, HI, OR, WA): fell 2.4 percent (-9.3 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 2.6 percent, and during the last five years, home values have decreased 20.7 percent.

South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): declined 3.2 percent (-12.2 percent, annualized) in the third quarter of 2010. Over the last 12 months, home values decreased 6.3 percent, and during the last five years, home values fell 12.0 percent.

Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): decreased 4.9 percent (-18.1 percent, annualized) in the third quarter of 2010. In the last 12 months, home values decreased 8.3 percent; during the last five years, home values declined 13.7 percent.



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