FHFA Reports House Prices Increase Slightly in Q3, 2009

Residential News » Residential Real Estate Edition | By Michael Gerrity | November 24, 2009 1:37 PM ET

(WASHINGTON, D.C.) -- According to the Federal Housing Finance Agency's (FHFA) seasonally adjusted purchase-only house price index (HPI), U.S. house prices rose modestly in the third quarter of 2009.

The HPI, calculated using home sales price information from Fannie Mae and Freddie Mac-acquired mortgages, was 0.2 percent higher on a seasonally adjusted basis in the third quarter than in the second quarter of 2009. Over the past year, seasonally adjusted prices fell 3.8 percent from the third quarter of 2008 to the third quarter of 2009. The quarterly report analyzing housing price appreciation trends was released today by FHFA Acting Director Edward J. DeMarco.

FHFA's seasonally adjusted monthly index for September was unchanged from August. The monthly change for the July-to-August period was revised to -0.5 percent, from an initial estimate of -0.3 percent.

"These data provide some evidence of short-term stabilization in housing prices, a likely result of the many ongoing efforts to stabilize markets," said DeMarco. "Given the headwinds facing markets, including high unemployment rates and continued high levels of delinquency and foreclosures, the longer-term view remains uncertain."

While the national, purchase-only house price index fell 3.8 percent from the third quarter of 2008 to the third quarter of 2009, prices of other goods and services fell 2.8 percent. Accordingly, the inflation-adjusted price of houses fell approximately 1.0 percent over the latest year.

Unlike the FHFA purchase-only index, FHFA's all-transactions house price index, which includes data from mortgages used for both home purchases and refinancings, fell over the latest quarter. The index declined 2.4 percent in the latest quarter and 4.1 percent over the four-quarter period.

Significant Findings:

  • Of the nine Census Divisions, the Mountain and Pacific Divisions, both in the western U.S., experienced the most significant price movements in the latest quarter. Prices fell 1.4 percent in the Mountain Division, while prices increased 1.9 percent in the Pacific Division.
  • Seasonally adjusted, purchase-only indexes indicate that prices rose in the latest quarter in 19 states and Washington, D.C. Prices rose over the latest four quarters in only seven states.
  • The purchase-only index for California rose 2.1 percent between the second and third quarters of this year.
  • Of the purchase-only indexes for the 25 most-populated metropolitan areas in the U.S., four-quarter price declines were greatest in the Phoenix-Mesa-Scottsdale, AZ Metropolitan Statistical Area. In that area prices declined 22.0 percent between the third quarters of 2008 and 2009. Prices held up best in the Denver-Aurora-

Broomfield, CO Metropolitan Area, where prices rose 3.3 percent over that period.

This quarter's Highlights article provides updated estimates of the impact of distressed sales on repeat-transactions house price indexes for the state of California. Following up on the analysis released with the second quarter HPI, the analysis reports a relatively modest effect of REO and short sales on the FHFA HPI in that state.

FHFA's purchase-only and all-transactions HPI track average house price changes in repeat sales or refinancings of the same single-family properties. The purchase-only index is based on more than five million repeat sales transactions while the all-transactions index includes more than 38 million repeat transactions. Both indexes use data obtained from Fannie Mae and Freddie Mac for mortgages originated over the past 34 years.

FHFA analyzes the combined mortgage records of Fannie Mae and Freddie Mac, which form the nation's largest database of conventional, conforming mortgage transactions. The conforming loan limit for mortgages purchased since January 2006 has been $417,000. Loan limits for mortgages originated in the latter half of 2007 through Dec. 31, 2008 were raised to as much as $729,750 in high-cost areas in the contiguous United States. Legislation generally extended those limits for 2009-originated mortgages. A recently enacted Congressional Continuing Resolution (PL111-88), further extended those limits for 2010 originations in places where the limits were higher than those that would have been calculated under preexisting rules.


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