The OFHEO
House Price Index (HPI) usually
doesn't get too much attention (except here where
we regard it as the best, or at least the most
interesting of the periodic housing indicators)
but this time around people began anticipating it
days before it was actually issued and there was
speculation that it would be the harbinger of
really bad news to come.
The
Index, however, did not show a nationwide drop in
housing prices as had been expected, just the
smallest increase in many years.
The
HPI tracks average house price changes from repeat
sales or refinancing of the same single family
houses as obtained from data collected and
maintained by Freddie Mac and Fannie Mae. The data
base contains information on more than 33 million
repeat transactions over the last 32 years and the
"purchase only" index is based on 4.9
million transactions.
The HPI rose only 0.1 percent in the second
quarter of 2007 compared to the first quarter and
was the lowest price increase since the fourth
quarter of 1994 when the change was -0.23. The
second quarter of 2007 showed a price increase of
3.2 percent since the second quarter one year ago.
This is the smallest annual price change since
1996-1997 when, for four consecutive quarters the
increase year-over-year was at or below 3 percent.
The
second quarter price appreciation for homes that
were purchased (eliminating data on refinancing)
was even lower year-over-year, increasing 2.6
percent. The increase between the first and second
quarter was slightly higher than the HPI at 0.5
percent seasonally adjusted.
It
is worth
noting, as the report does, that
the reporting period ended in June, before the
recent mortgage
market instability which could be
reflected in the next HPI report in November.
Even
though the pace of price increases has slowed
appreciably from that which has been seen over the
last few years, it is still running ahead of
non-housing goods and services as reflected in the
Consumer Price Index. House prices rose 3.2
percent over the past year while the price of
others goods and services rose 2.1 percent.
OFHEO
Director James
B. Lockhart said about the report,
"House prices were basically flat in the
second quarter despite tightening credit policies,
rising foreclosure rates, and weakening buyer
sentiment. Significant price declines appear
localized in areas with weak economies or where
price increases were particularly dramatic during
the housing boom."
Utah ranked number one on the basis of a one year price
appreciation of 15.28 percent and second for the
quarter with prices up 2.66 percent.
Wyoming led for the quarter at nearly 3 percent and a
yearly appreciation of 12.84 percent. These were
the only two states in double digits for the year
with
Washington
,
Montana
, and
New Mexico following behind at 9.12, 9.06, and 8.81 percent
respectively.
At
the bottom
of the heap were
Rhode Island
with a decline for the year of 0.97 percent and a
quarterly loss of 1.74, followed by
Massachusetts
(-0.99 and -1.09),
California
(-1.38, -1.21),
Michigan
(-1.42, -1.43); and
Nevada (1.45, 1.62.) Four of these five states were among
those that experienced stratospheric increases
over the last five years while
Michigan never seems to catch a break in good years or bad.
These five states with price declines represent
the largest number of states in negative figures
since 1996-1997.
On
a regional basis, the West South Central and the
Mountain Census Divisions again had the strongest
housing markets with appreciation over the last
year of 6.3 percent and 6.1 percent according to
the HPI and 5.6 percent and 6.7 percent for the
purchase only index.
The
New England Census Division continues to have what
the report calls "the most anemic" price
appreciation at 0.5 percent for the last four
quarters. This was more than a full percent below
the runner-up East North Central Division.
The Metropolitan Statistical Areas (MSAs) with the greatest
appreciation between the second quarters of 2006
and 2007 were
Wenatchee
,
Washington
(23.5 percent);
Provo-Orem
,
Utah
(18.2 percent); and
Salt Lake City
,
Utah (16.0 percent.) Those faring the worst were all in
California
;
Merced
(-8.7 percent), Santa Barbara-Santa Maria-Goleta
(-8.1 percent), and
Stockton (-7.2 percent).
Newsletter information courtesy of Mortgage News
Daily. The purpose of this
newsletter is not to give advice. The purpose is
to stimulate thought for our clients and
professionals within our network.
If you are a professional receiving this
newsletter or know of one, please contact our
office to introduce yourself and your services to
us. We are always seeking to grow our referral
network and expose professional services to our
client base.
The loan professional that has made this
information available specializes in equity
repositioning solutions for those buying, selling
or refinancing real estate.
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