First Quarterly Price Decline for U.S. since 1994

[q url="http://beautifulcity.us/content/view/192/1/"]

For the first time in nearly thirteen years, U.S. home prices experienced a quarterly decline. The OFHEO House Price Index (HPI), which is based on data from sales and refinance transactions, was 0.4 percent lower in the third quarter than in the second quarter of 2007. This is similar to the quarterly decline of 0.3 percent (seasonally-adjusted) shown in the purchase-only index. The annual price change, comparing the third quarter of 2007 to the same period last year showed an increase of 1.8 percent , the lowest four-quarter increase since 1995. OFHEO’s purchase-only index, which is based solely on purchase price data, indicates the same rate of appreciation over the last year.

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends.

“While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said Lockhart. “Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.”

Many of the cities and states experiencing the sharpest declines this quarter were the same cities and states experiencing the sharpest increases just a couple of years ago, suggesting some price corrections in those markets.

Nationally, house prices grew at the same rate over the past year as did prices of non-housing goods and services reflected in the Consumer Price Index. House prices and prices of other goods and services both rose 1.8 percent.

“Rising inventories of for-sale properties are clearly having a material impact on home prices,” said OFHEO Chief Economist Patrick Lawler. “Until those inventories shrink, that will be a great source of resistance to price increases.”

It should be noted that the annual growth rate of 1.8 percent 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. A more thorough discussion of differences can be found in “ A Note on the Differences between the OFHEO and the S&P/Case-Shiller House Price Indexes .”

Significant HPI Findings:

Highest and Lowest Appreciation :

1. Ten states saw price declines over the latest four quarters, the greatest number of declines since the 1996-97 period. Twenty-one states saw price declines in the latest quarter.

In Nevada, California, and Michigan—the states with the greatest price declines—the purchase-only index (An index using only purchase price data) estimates depreciation rates more than three percentage points lower. Nevada’s difference is the most extreme, with the all-transactions index (purchases, rate-term refinances, and cash-out refinances) showing a 2.4 percent price decline and the purchase only index estimating a 6.4 percent decline. The purchase-only index indicates 7.2 percent and 7.1 percent price declines in California and Michigan, much deeper declines than the all transactions index. Also noteworthy is Florida, where the purchase-only index estimates a fourquarter decline of 4.6 percent (more than two percentage points below the all-transactions index).

The differences in quarterly price change estimates can be significant and also tend to be relatively large in states with the weakest housing markets. For example, the purchase-only index shows a 4.2 quarterly price decline for California (as compared to 1.8 percent for the alltransactions index). In Florida, the quarterly price decline was estimated at 3.6 percent by the purchase-only index, a greater decline than the 2.1 percent price drop shown in the alltransactions HPI.

2. The states with the greatest rates of appreciation between the third quarter of 2006 and the third quarter of 2007 were: Utah (12.9%), Wyoming (11.8%), Montana (7.7%), New Mexico (7.4%), and Washington (7.0%). The states with the largest depreciation for the same period were: Michigan (-3.7%), California (-3.6%), Nevada (-2.4%), Massachusetts (-2.3%), and Rhode Island (-2.2%).

3. For the third consecutive quarter, Wenatchee, Washington exhibited the highest four-quarter appreciation among the 287 Metropolitan Statistical Areas (MSAs) on OFHEO’s list of “ranked” cities. Annual appreciation in Wenatchee was 15.7 percent. Among  the metropolitan Miami ranked 110 with 1 year appreciation of 3.45% Qrt -0.78% and 5 year appreciation of 114.98%

The percentage chage in home prices nation wide for period ended September 30, 2007 in 1 year was 1.79% (figures based on weighed division average) the change for the qtr. was -0.36%, 5 year change was 46.92% and change since 1980 was 308%. Changes for Florida was 1 year = -2.12%, 1 year = -2.08%, Qtr = 85.92% and since 1980 = 378.13%. Based on annual percent change Florida ranked 46th among all 50 states.

Top 20 Metropolitan Statistical Areas and Divisions with Highest Rates of House Price Appreciation

Percent Change in House Prices with MSA Rankings

Period Ended September 30, 2007

(Estimates use all-transactions HPI which includes purchase and refinance mortgages)

National

MSA
Ranking**
1-Yr.
Qtr.
5-Yr.

Wenatchee, WA
1
15.70
0.70
79.01

Provo-Orem, UT
2
14.35
1.82
50.61

Grand Junction, CO
3
14.05
1.97
65.61

Ogden-Clearfield, UT
4
13.95
2.45
42.02

Salt Lake City, UT
5
13.37
2.44
60.17

Idaho Falls, ID
6
11.69
3.78
49.72

Austin-Round Rock, TX
7
9.67
1.21
28.82

Beaumont-Port Arthur, TX
8
9.44
1.23
33.27

Asheville, NC
9
9.44
1.97
55.46

Billings, MT
10
9.07
1.96
49.69

Logan, UT-ID
11
9.05
0.41
31.24

Yakima, WA
12
8.80
2.53
37.90

Spokane, WA
13
8.79
1.74
69.43

Hickory-Lenoir-Morganton, NC
14
8.56
3.81
22.52

San Antonio, TX
15
8.41
1.83
39.49

Houma-Bayou Cane-Thibodaux, LA
16
8.31
2.42
43.66

Charlotte-Gastonia-Concord, NC-SC
17
8.10
1.92
28.48

El Paso, TX
18
7.94
-0.10
54.54

Seattle-Bellevue-Everett, WA (MSAD)
19
7.79
1.24
67.19

Durham, NC
20
7.78
2.26
27.67  

**Note: Rankings based on annual percentage change for all MSAs containing at least 15,000 transactions over the last 10 years.

Bottom 20 Metropolitan Statistical Areas and Divisions with Lowest Rates of House Price Appreciation

Percent Change in House Prices with MSA Rankings

Period Ended September 30, 2007

(Estimates use all-transactions HPI which includes purchase and refinance mortgages)

National

MSA
Ranking**
1-Yr.
Qtr.
5-Yr.

Merced, CA
287
-13.00
-5.37
72.54

Punta Gorda, FL
286
-11.79
-3.61
71.04

Santa Barbara-Santa Maria-Goleta, CA
285
-11.63
-4.64
55.81

Yuba City, CA
284
-11.13
-4.16
70.11

Stockton, CA
283
-10.03
-4.92
65.07

Cape Coral-Fort Myers, FL
282
-9.67
-4.14
81.40

Sarasota-Bradenton-Venice, FL
281
-9.63