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 latest quarter.

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.