First American CoreLogic Sees Improvement in Home Price Declines

National housing prices fell 9.2 percent in May compared to a year ago, representing the smallest year-over-year decline recorded in 2009 and the lowest since December 2007, according to ""newly released data"":http://www.facorelogic.com/newsroom/pressreleasedetails.jspxid=10158 from ""First American CoreLogic"":http://www.facorelogic.com and its ""LoanPerformance Home Price Index"":http://www.loanperformance.com/products/hpi.aspx (HPI). May’s decline was a 0.5 percent improvement over the 9.7 percent decline in April.
Since U.S. home prices hit their highest levels in July 2006, they have fallen an estimated 20.1 percent. First American CoreLogic’s market data shows that the rate of national price declines for residential single-family detached properties peaked at 11.9 percent in January 2009 and has since slowed by more than 2.5 percentage points through May. The company’s June preview data suggests further improvements in the rate of decline.
Despite the positive national trend, First American CoreLogic says the geographic breadth of price declines has not improved. The company reported 41 states with price drops in May, and 16 states with double-digit depreciation - well above the number of states experiencing declines a year ago.
Based on First American CoreLogic’s index, Nevada (-26.4 percent) remained the top-ranked state for annual price depreciation, with Florida (-25.5 percent) close behind. California’s (-19.8 percent) price trend continued to improve in May and is currently more than 10 percentage points better than the peak decline of 30.3 percent set in August 2008.
Arizona (-18.1 percent) and Illinois (-16.9 percent) round out the top five states for price declines, according to First American CoreLogic’s study. The company said Florida and Illinois are the only two states that are not currently showing signs of moderation or improvement among areas with the largest price decreases.
First American CoreLogic says that over the past few months, there has been a divergence in single-family detached residential properties as compared to single-family attached residential properties, which include condos and townhomes. As of May, prices of attached properties declined 12.0 percent from a year ago, compared to a 9.2 percent decrease for detached properties. The company says the gap reflects a very weak condo market, tighter underwriting guidelines for this type of property, and the faster run-up in prices for condos during the bubble market.
Mark Fleming, chief economist for First American CoreLogic, commented, ""Although there has been some improvement in the national HPI, collateral risk will continue to be the main driver of the housing market for the remainder of 2009. Until home prices and the economy stabilize, mortgage performance will continue to worsen and home sales activity will remain flat nationally through 2010.""