National Home Values Fall In First Quarter: Steepest Decline Since 1971
|May 30, 2008|
McLean, VA – Freddie MacConventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 10.4 percent drop in U.S. home values during the first quarter of 2008 on an annualized basis, following a downward revised 9.9 percent annualized drop in the fourth quarter. Over the four quarters ending with the first quarter of 2008, home sales prices fell an average of 4.4 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series.
The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series, which includes data from both home purchase transactions and mortgage refinancings, with the latter home values based on appraisals. The CMHPI Classic Series indicated that home values fell 2.4 percent nationally during the first quarter on an annualized basis, the steepest quarterly decline since 1971. Over the year ending with the first quarter, home values depreciated 0.8 percent on average in the Classic Series, the first annual drop in this index over the 39 years spanned by the series.
"Particularly striking has been the depth and breadth of home-value decline across the U.S." said Frank Nothaft, Freddie Mac vice president and chief economist. "In the past we have seen regions that were still appreciating while the national average had registered a decline. In the CMHPI Purchase-Only Series we saw all nine regions of the country experience price declines at the same time, though to different degrees: During the first quarter, house prices dipped an average of 0.5 percent in the West South Central states but fell an average of 6.9 percent for states in the Pacific division.
“While we expect to see further declines in average home values throughout this year and into 2009, we will be watching very carefully for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales, now that the traditional home-buying season spanning late spring and early summer is underway.”
Forty-six states registered price declines in the first quarter and 29 states had declines measured from the same time a year ago, according to the CMHPI Purchase-Only Series. Montana, North Dakota, South Carolina and Wyoming had modest price gains during the first quarter. In general, states in which the local economy remained more vibrant tended to have better home-value performance than other states.
Based on annualized quarterly growth rates in the CMHPI Purchase-only Series, the West South Central states showed the smallest decline in home sales prices over the first quarter at a -1.9 percent rate. The Middle Atlantic states experienced the second smallest drop in home prices of -4.1 percent, followed by the East South Central states which posted a -4.3 percent change. Two divisions tied for the median change in home values at -5.9 percent: East North Central and Mountain. The West North Central division recorded a change of -8.6 percent in home prices and three regions showed double digit declines: South Atlantic at -10.1 percent, New England at -11.0 percent and Pacific at -24.8 percent.
The Conventional Mortgage Home Price Index Classic Series shows the following regional performances: