RISMEDIA

September 11, 2009

Freddie Mac announced that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 1.7% quarterly gain (7.0% annualized) during the second quarter 2009 for the U.S., following a downward revised 1.5% drop (–5.9% annualized) in the first quarter. Over the year ending with the second quarter of 2009, U.S. home sales prices fell 6.7% in the CMHPI Purchase-Only Series – less than the 8.5% annual decline recorded between the first quarter of 2008 and the first quarter of 2009.

“The pickup in home price growth rates is consistent with other housing market indicators that show home sales and single-family construction up in the second quarter,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The lowest mortgage rates in a half-century have pushed housing affordability to the highest level in at least 40 years, helping to encourage buying. The spring is generally the strongest buying season each year, and we normally see home price growth respond similarly – this year was no exception. Moreover, the price gains were broad-based and for the first time in two years average home sales values rose at least a little bit in every region. 

“Values are still down relative to their peaks, though. For example, as measured by the CMHPI, average values in the New England, East North Central and Pacific divisions are at 2004 levels, on average. In contrast, the average value in the West South Central area is only slightly below its 2008 peak, while the index for the East South Central region is at about its 2006 level. Other areas have home-purchase values at 2005 levels.”

The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series that includes data from both home purchase transactions and mortgage refinancings, with the latter values based on appraisals. Generally, because appraisals are backwards looking through the use of recent comparable property transactions, the Classic Series will typically lag changes in the Purchase-Only series. The CMHPI Classic Series indicated that over the year ending with the second quarter, home values depreciated 4.5% in the U.S. measure, a steeper drop than the 3.9% decline over the year ending in the first quarter of 2009.

The CMHPI Purchase-Only Series had the following regional house-price changes:

Pacific Division (AK, CA, HI, OR, WA): jumped up 3.2% (13.4 percent, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 15.7%, and during the last five years, home values have decreased 5.1%.

West North Central Division (IA, KS, MN, MO, ND, NE, SD): increased 2.3% (9.7, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 2.4%; over the last five years, home values increased 6.1%.

East North Central Division (IL, IN, MI, OH, WI): rose 2.0% (8.4%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 3.9%, and during the last five years, home values decreased 1.3%.

West South Central Division (AR, LA, OK, TX): grew 1.6% (6.5%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 0.3%, and during the last five years, home values increased 21.2%.

East South Central Division (AL, KY, MS, TN): increased 1.6% (6.5%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 2.9%, and during the last five years, home values increased 17.0%.

South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): rose 1.4% (5.9%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 7.9%, and during the last five years, home values increased 10.6 percent.

Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): grew 0.7% (2.9%, annualized) in the second quarter of 2009. In the last 12 months, home values decreased 11.0%; during the last five years, home values increased 12.0 percent.

Middle Atlantic Division (NJ, NY, PA): increased 0.6% (2.6%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 3.7%, and during the last five years, home values increased 18.0%.

New England Division (CT, MA, ME, NH, RI, VT): increased 0.5% (1.9%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 3.2%, and during the last five years, home values increased 2.2%.

Unlike other home price indexes based on mean or median values of homes sold during a given period, the Conventional Mortgage Home Price Index is constructed, using regression techniques, from observations of actual sales prices or appraised values of the same homes over time.