Home prices bottomed out in the second quarter but prices are not rising as quickly as forecasters had assumed, an industry survey said Tuesday.
The Federal Housing Finance Agency’s House Price Index, which compiles data on single-family homes, rose by 0.3% in July, half the pace expected by analysts. The previously reported 0.5% advance in June was trimmed to just +0.1%.
Despite the revisions, the overall story hasn’t changed. July marks the third consecutive month that prices have gone up, meaning the median price bottomed out in April. Since its peak in April 2007, prices fell 11.5% over two years. Over the past 12 months, the index has slid 4.2%.
Those figures are relatively modest when compared to the Case-Shiller index, whose peak-to-trough ratio saw home prices fall by one-third. Markets put more weight on the Case-Shiller index because it is more comprehensive, whereas the FHFA only reports on homes whose mortgages have been guaranteed by Freddie Mac or Fannie Mae, the government-sponsored entities that buy and securitize mortgages.
“The FHFA index misses all of the homes in places such as California and Florida which had significant non-traditional financing, such as subprime, alt-A, adjustable rate or jumbo mortgages,” said Joseph LaVorgna, chief US economist at Deutsche Bank.
Looking forward, prices should remain firm. With credit tight and the unemployment rate at 9.7%, few are expecting the housing re-inflate any time soon. Indeed, if the government fails to stop the ongoing crisis of foreclosures, the decline in home prices could resume.
Monthly prices from June to July by region:
- Pacific: +1.6%
- Middle Atlantic: +1.0%
- South Atlantic: +0.6%
- Mountain: +0.3%
- West North Central: +0.3%
- East South Central: -0.9%
- East North Central: -0.3%
- West South Central: -0.2%
- New England: -0.1%
