Home Price Declines Hit Record in Q4

Home prices in the United States posted record declines in the fourth quarter of 2008, according to the ""Federal Housing Finance Agency’s"":http://www.fhfa.gov (FHFA's) ""House Price Index"":http://www.fhfa.gov/webfiles/1280/4q08hpi.pdf (HPI).
The agency's purchase-only HPI, based on data from home sales, was 3.4 percent lower in the fourth quarter than in the third quarter. This decline was greater than the 2.0 percent decline in the third quarter and the largest in the purchase-only index’s 18-year history. According to FHFA, over the past year, seasonally-adjusted prices fell 8.2 percent from the fourth quarter of 2007 to the fourth quarter of 2008.
While the national purchase-only house price index fell 8.2 percent between the fourth quarters of 2007 and 2008, FHFA noted that prices of other goods and services rose 1.4 percent. Accordingly, the inflation-adjusted price of homes fell approximately 9.6 percent over the latest year.
Based on FHFA's purchase-only index, prices fell over the last four quarters in 44 states and Washington, D.C., exceeding 5 percent in 22 states and in excess of 10 percent in eight states. All nine Census Divisions experienced price declines in the latest quarter. Prices were weakest in the Pacific Census Division, which experienced a 7.1 percent price decline in the quarter. Home values in the West South Central Division were strongest, with a decline of only 0.9 percent.
FHFA’s all-transactions HPI, which includes data from home sales and appraisals for refinancings, showed significantly less weakness over the latest quarter than the purchase-only index. Nationally, the all-transactions HPI fell 0.2 percent in the latest quarter. It was down 4.5 percent over the duration of 2008, the largest four-quarter drop in the index, which extends back to 1975.
On a seasonally-adjusted basis, FHFA said, home prices as of December 31, 2008 are down 10.9 percent since their April 2007 peak.
James B. Lockhart, FHFA director, said,""Price declines continued in the fourth quarter although not as rapidly as some had expected. We are hopeful the housing initiatives announced last week by President Obama will begin to provide much-needed stability to the housing markets.""
FHFA’s purchase-only and all-transactions HPIs 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 36 million repeat transactions. Both indexes are based on data obtained from ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com for mortgages originated over the past 34 years, the nation’s largest database of conventional, conforming mortgage transactions.
For FHFA's complete list of state and metropolitan statistical area (MSA) appreciation rates, ""click here"":http://www.fhfa.gov/webfiles/1280/4q08hpi.pdf.