January Gain Tied to Sales in Strong Markets
U.S. home prices rose a seasonally adjusted 1.7 percent from December to January, driven by a disproportionate number of sales in strong markets, according to a home-price index that tracks repeat sales of homes purchased with mortgages purchased or guaranteed by Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency’s monthly House Price Index showed U.S. home prices down 6.3 percent from a year ago and 9.6 percent below their April 2007 peak.
Because the index does not include mortgages too large or risky for Fannie and Freddie, it can understate both price increases and price declines.
FHFA said the unexpected increase in the index from December to January — the first in a year — was largely explained by changes in the geographic mix of sales, with stronger markets seeing a disproportionate share of transactions. Adjusting for that effect, home prices would still have crept up in January, but the change “would have been far less dramatic,” FHFA said in a press release.
Sales volumes were low during January, adding to the imprecision of the index, and FHFA warned that it could be subject to “significant” revision. A previously reported 0.1 percent increase in the index in December has been revised to a 0.2 percent decline.
All but one of nine Census divisions saw price gains between December 2008 and January 2009. The East North Central Division saw a 3.9 percent gain, followed by the South Atlantic (3.6 percent), New England (2 percent), Middle Atlantic (1.5 percent), West North Central (1 percent), Mountain (0.8 percent) and East South Central (0.6 percent). The index was unchanged in the West South Central Division, while prices were down 0.9 percent in the Pacific Census division.
Looking back a year, all nine Census divisions have seen price declines. The Pacific Census Division has seen the largest price drop (-21.1 percent), followed by the Mountain (-9.2 percent), South Atlantic (-8.3 percent), Middle Atlantic (-3.6 percent); New England (-2.4 percent), East North Central and East South Central (both -1.4 percent), West North Central (-1.1 percent) and West South Central (-0.4 percent).