It is sometimes hard to keep up with all of the housing surveys that come from
economic forecasters, trade associations, and the government but one we always
look forward to is the quarterly Office of Federal Housing Enterprise Oversight
(OFHEO) House Price Index (HPI) study.
The OFHEO report is interesting because it, like the S&P/Case-Shiller
study released earlier this week, includes only repeat sales of the same
houses. Unlike the 20 city Case-Schiller, however, the HPI is nationwide in
scope and uses the massive Freddie Mac and Fannie Mae databases on sales and
refinance transactions. The biggest drawback to the HPI is that it is not published
until a full two months after the close of the quarter.
The HPI for the third quarter was released on Thursday and for the first
time in 13 years
found that U.S. home prices experienced a quarterly
decline. Home prices were 0.4 percent lower nationally than in the second quarter.
When only purchase transactions are included the decline was 0.3 percent. While
the overall index and the purchase only index did increase 1.8 percent from
the same quarter in 2006 this was the smallest four-quarter increase since 1995.
Ten states saw price declines over the latest four quarters, the greatest number
of declines since the 1996-97 period and twenty-one saw price declines in the
OFHEO Director James B. Lockhart said in a press release accompanying the report,
"While select markets still maintain robust rates of appreciation,
our newest data show price weakening in a very significant portion of the country.
Indeed, in the third quarter, more than 20 states experienced price declines
and, in some cases, those declines are substantial."
As might be expected, many of the locations experiencing the sharpest declines
this quarter were the same cities and states that were riding the rocket when
house prices were soaring. California, for example, experienced
a five-year appreciation in housing prices of 80.38 percent but prices were
down 1.76 percent in the third quarter and 3.59 since the third quarter of 2006.
Nevada with average prices up 84.28 percent in five years was down 0.70 for
the quarter and 2.42 percent for the year. There are, however, places that never
seem to get lucky. Michigan, 51st in the national rankings based on a price
drop of 3.74 percent over the last four quarters has seen appreciation of only
6.61 percent since 2002. To provide a little perspective, nationally house prices
increased 46.92 percent over five years.
But many areas appear to still have robust markets. The top five states
in terms of yearly price increases are Utah (12.89 percent), Wyoming (11.77
percent), Montana (7.74 percent), New Mexico (7.39 percent) and Washington (6.98
percent). Each of these states had price increases in the third quarter of at
least 1 percent.
At the bottom of the list, in addition to Nevada, California, and Michigan
were Rhode Island (-2.24 percent) and Massachusetts (-2.31 percent.)
Of the 287 cities on OFHEO's list of "ranked" Metropolitan
Statistical Areas (MSAs), 204 had positive four-quarter appreciation and 83
had price declines.
The MSAs list was led, for the third consecutive quarter by Wenatchee, Washington
with an annual increase of 15.70 percent and a quarterly rise of 0.70. Three
of the remaining top five MSAs were in Utah; Provo-Orem (14.35 percent); Ogden-Clearfield
(13.95 percent); and Salt Lake City (13.37 percent.) Rounding out the list in
third place is Grand Junction, Colorado (14.05 percent.)
At the bottom of the MSA ranks is Merced, California with a one-year decline
in prices of 13 percent followed by Punta Gorda, Florida; Santa Barbara-Santa
Maria-Goleta, California; Yuba City and Stockton, both in California. These
areas had price declines ranging from 10.03 to 11.79 percent.
The report notes that the annual growth rate of 1.8 percent reported nationally
for the last year is significantly different from other indexes, which are showing
depreciation. The OFHEO index weights sales prices differently than other measures,
incorporates data from a wider geographic area, and is focused on homes with
conventional, conforming loans.
The OFHEO report contains, in addition to figures on every state and 287 MSAs,
annual and five-year data on a number of smaller cities. The full
PDF of report is online.