OFHEO Report Shows Declines in Housing Prices Slow in Second Quarter
Thursday, September 04, 2008
Home prices in the United States fell in the second quarter of 2008, according to the seasonally-adjusted purchase-only house price index (HPI) issued by the Office of Federal Housing Enterprise Oversight (OFHEO) last week. OFHEO, whose mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac, releases it report analyzing housing price appreciation trends every quarter.
The index, which is based on data from home sales, was 1.4 percent lower on a seasonally-adjusted basis in the second quarter than in the first quarter. This decline was less steep than the 1.7 percent decline in the prior quarter. Over the past year, prices fell 4.8 percent between the second quarter of 2007 and the second quarter of 2008. According to the OFHEO report, the decline is the largest in the purchase-only index’s 17-year history, but is much smaller than those of other indexes.
OFHEO Director James B. Lockhart explained, “Tighter credit conditions and relatively high inventory levels led to some sharp price declines in the second quarter.” Lockhart added, “However, the majority of Metropolitan Statistical Areas (MSAs) posted positive four-quarter growth.”
The monthly index, which is a purchase-only measure of price changes, was flat between May and June on a seasonally-adjusted basis, but was down five percent since the April 2007 peak. In June, seasonally-adjusted prices in the Pacific census division were 17.6 percent off their early 2007 peak, making it the worst performing division. By contrast, June prices in the West South Central division reached a new high.
OFHEO said that while the national purchase-only house price index fell 4.8 percent between the second quarters of 2007 and 2008, prices of other goods and services increased 5.3 percent. Accordingly, the inflation-adjusted price of homes fell approximately 10.1 percent over the latest year.
Significant findings of OPHEO's quarterly report regarding the purchase-only index included:
-Prices increased over the past four quarters in 12 states.
-In the West South Central division, prices rose by 1.5 percent over the past four quarters, but prices declined in all of the other divisions.
-Prices were weakest in the Pacific Census division, where they dropped 15.6 percent.
-Three states - California, Florida, and Nevada - saw prices decline more than 12 percent over the past two quarters.
-The census division with the greatest seasonally-adjusted quarterly price increase was the West South Central division, which saw prices rise 0.7 percent. The Pacific census division, the worst-performing, experienced a seasonally-adjusted quarterly price decline of 5.0 percent.
“The most overbuilt areas of the country - including California, Nevada, Arizona, and Florida -contrast greatly with most other states, where prices are declining more moderately or even increasing,” said OFHEO Chief Economist Patrick Lawler. “Nationally, the substantial declines in the weakest markets have driven seasonally adjusted prices down to late-2005 levels.”
Based on OFHEO's all-transactions HPI, the five states with the greatest price appreciation between the second quarters of 2007 and 2008 were: Oklahoma (4.9 percent), Wyoming (4.4 percent), South Dakota (3.8 percent), North Carolina (3.6 percent), and North Dakota (3.6 percent). The five states with the sharpest depreciation for the same period were: California (-15.8 percent), Nevada (-14.1 percent), Florida (-12.4 percent), Arizona (-9.2 percent), and Rhode Island (-4.8 percent).
The metropolitan areas with the greatest appreciation over the past year were Houma-Bayou Cane-Thibodaux, Louisiana (9.1 percent); Decatur, Alabama (6.4 percent); and Charleston, West Virginia (6.0 percent).
Of the 20 ranked cities with the greatest price declines over the last four quarters, all but one (Las Vegas-Paradise, Nevada) were in California or Florida. The metros with the sharpest depreciation over the year were Merced, California (-34.5 percent), Stockton, California (-31.7 percent), and Modesto, California (-28.5 percent).
To view OFHEO's full report and a complete list of state and city appreciation rates, click here.
The index, which is based on data from home sales, was 1.4 percent lower on a seasonally-adjusted basis in the second quarter than in the first quarter. This decline was less steep than the 1.7 percent decline in the prior quarter. Over the past year, prices fell 4.8 percent between the second quarter of 2007 and the second quarter of 2008. According to the OFHEO report, the decline is the largest in the purchase-only index’s 17-year history, but is much smaller than those of other indexes.
OFHEO Director James B. Lockhart explained, “Tighter credit conditions and relatively high inventory levels led to some sharp price declines in the second quarter.” Lockhart added, “However, the majority of Metropolitan Statistical Areas (MSAs) posted positive four-quarter growth.”
The monthly index, which is a purchase-only measure of price changes, was flat between May and June on a seasonally-adjusted basis, but was down five percent since the April 2007 peak. In June, seasonally-adjusted prices in the Pacific census division were 17.6 percent off their early 2007 peak, making it the worst performing division. By contrast, June prices in the West South Central division reached a new high.
OFHEO said that while the national purchase-only house price index fell 4.8 percent between the second quarters of 2007 and 2008, prices of other goods and services increased 5.3 percent. Accordingly, the inflation-adjusted price of homes fell approximately 10.1 percent over the latest year.
Significant findings of OPHEO's quarterly report regarding the purchase-only index included:
-Prices increased over the past four quarters in 12 states.
-In the West South Central division, prices rose by 1.5 percent over the past four quarters, but prices declined in all of the other divisions.
-Prices were weakest in the Pacific Census division, where they dropped 15.6 percent.
-Three states - California, Florida, and Nevada - saw prices decline more than 12 percent over the past two quarters.
-The census division with the greatest seasonally-adjusted quarterly price increase was the West South Central division, which saw prices rise 0.7 percent. The Pacific census division, the worst-performing, experienced a seasonally-adjusted quarterly price decline of 5.0 percent.
“The most overbuilt areas of the country - including California, Nevada, Arizona, and Florida -contrast greatly with most other states, where prices are declining more moderately or even increasing,” said OFHEO Chief Economist Patrick Lawler. “Nationally, the substantial declines in the weakest markets have driven seasonally adjusted prices down to late-2005 levels.”
Based on OFHEO's all-transactions HPI, the five states with the greatest price appreciation between the second quarters of 2007 and 2008 were: Oklahoma (4.9 percent), Wyoming (4.4 percent), South Dakota (3.8 percent), North Carolina (3.6 percent), and North Dakota (3.6 percent). The five states with the sharpest depreciation for the same period were: California (-15.8 percent), Nevada (-14.1 percent), Florida (-12.4 percent), Arizona (-9.2 percent), and Rhode Island (-4.8 percent).
The metropolitan areas with the greatest appreciation over the past year were Houma-Bayou Cane-Thibodaux, Louisiana (9.1 percent); Decatur, Alabama (6.4 percent); and Charleston, West Virginia (6.0 percent).
Of the 20 ranked cities with the greatest price declines over the last four quarters, all but one (Las Vegas-Paradise, Nevada) were in California or Florida. The metros with the sharpest depreciation over the year were Merced, California (-34.5 percent), Stockton, California (-31.7 percent), and Modesto, California (-28.5 percent).
To view OFHEO's full report and a complete list of state and city appreciation rates, click here.
