Home Values Decline in Fourth Quarter

Home Values Decline in Fourth Quarter

Distressed Sales Continue to Weigh on House Prices

McLean, VA – March 1, 2011 – (RealEstateRama) — Freddie Mac (OTC:FMCC) announced today the results of its fourth quarter Conventional Mortgage Home Price Index (CMHPI).

News Facts

  • The Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series for the United States registered a 2.6 percent decrease (-10.1 percent annualized) in the fourth quarter relative to the third quarter on a not-seasonally-adjusted basis. U.S. home values fell 4.3 percent relative to the fourth quarter a year ago.
  • Home values fell in all nine Census Divisions.
  • The revised change in home values for the third quarter of 2010 is a decline of 2.2 percent (-8.5 percent annualized) relative to the second quarter of 2010 and a decrease of 3.3 percent relative to the third quarter of 2009.
  • The CMHPI Classic Series, which includes data on both home purchase values and appraisals, indicated that average U.S. home values fell 0.8 percent (-3.3 percent annualized) during the fourth quarter. Comparing the fourth quarter of 2010 with the fourth quarter of 2009, the Classic Series shows 1.1 percent depreciation.

Quotes

Attributed to Frank Nothaft, Freddie Mac Chief Economist

  • “Low mortgage rates and home prices have combined to push homebuyer affordability to levels not seen in decades in most places. This high affordability will likely translate into an increase in 2011 home sales relative to last year.”
  • “Foreclosed-property and short sales remain a big part of the market. However, new foreclosures will begin to gradually slow. Delinquency rates reported by the Mortgage Bankers Association continue to recede from their peaks but remain high, particularly in distressed areas of the country.”

Regional Summary

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

  • Middle Atlantic Division (NJ, NY, PA): decreased 1.1 percent (?4.4 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 1.7 percent, and during the last five years, home values decreased 0.6 percent.
  • East North Central Division (IL, IN, MI, OH, WI): fell 2.2 percent (?8.3 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 2.9 percent, and during the last five years, home values decreased 12.4 percent.
  • East South Central Division (AL, KY, MS, TN): fell 2.2 percent (?8.5 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 3.9 percent, and during the last five years, home values increased 1.5 percent.
  • West South Central Division (AR, LA, OK, TX): fell 2.4 percent (?9.2 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 2.1, and during the last five years, home values increased 8.4 percent.
  • New England Division (CT, MA, ME, NH, RI, VT): decreased 2.3 percent (-8.8 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 1.8 percent, and during the last five years, home values declined 11.7 percent.
  • South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): declined 2.8 percent (?10.6 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 5.7 percent, and during the last five years, home values fell 16.9 percent.
  • West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 2.8 percent (?10.9 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 3.8 percent; over the last five years, home values fell 5.3 percent.
  • Pacific Division (AK, CA, HI, OR, WA): fell 3.8 percent (?14.4 percent, annualized) in the fourth quarter of 2010. Over the last 12 months, home values decreased 6.3 percent, and during the last five years, home values have decreased 26.7 percent.
  • Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): decreased 4.3 percent (?16.0 percent, annualized) in the fourth quarter of 2010. In the last 12 months, home values decreased 9.6 percent; during the last five years, home values declined 20.0 percent.

Conventional Mortgage Home Price Index Announcement

  • The CMHPI will be discontinued after this release. In its place, the Freddie Mac House Price Index (FMHPISM) will be released each quarter. The FMHPI release is planned to be coincident with, or shortly after, Freddie Mac’s release of its quarterly earnings.
  • The FMHPI is also a repeat-transactions index, although it differs slightly in methodology. More information, including monthly values from January 1975 to December 2010 for the United States and by state and metropolitan area, can be found at: http://www.freddiemac.com/finance/cmhpi

Conventional Mortgage Home Price Index Information

  • The CMHPI Purchase-Only Series includes only property values based on home purchases with a conventional mortgage 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.
  • Unlike other home price indexes based on mean or median values of homes sold during a given period, the CMHPI is constructed using regression techniques from observations of actual sales prices or appraised values of the same homes over time. The street addresses of properties that serve as collateral for mortgages are processed using software certified by the United States Postal Service to create a uniform address format and are then matched to identify consecutive transactions on the same property. There are currently more than 42 million records in the repeat-transactions database used to construct the classic Conventional Mortgage Home Price Index – this database includes transactions on one-family detached and townhome properties serving as collateral on loans originated through the fourth quarter of 2010 and purchased by Freddie Mac or Fannie Mae by January 31, 2011.
  • Index values and growth rates for the classic series are available for the nation as a whole as well as for the nine Census divisions, the 50 states and the District of Columbia, and 392 metropolitan statistical areas (MSAs) and metropolitan divisions; index values and growth rates for the purchase-only series are available for the nation and nine Census divisions. All of the CMHPI series can be found on Freddie Mac’s web site, www.freddiemac.com/finance/cmhpi.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Purchase-Only Transactions Series

Quarterly Change
Q3 2010-Q4 2010
-2.3 -1.1 -2.8 -2.2 -2.4 -2.8 -2.2 -4.3 -3.8 -2.6
Annualized
Quarterly Change
Q3 2010-Q4 2010
-8.8 -4.4 -10.6 -8.5 -9.2 -10.9 -8.3 -16.0 -14.4 -10.1
Annual Change
Q4 2009-Q4 2010
-1.8 -1.7 -5.7 -3.9 -2.1 -3.8 -2.9 -9.6 -6.3 -4.3
5-Year Change
Q4 2005-Q4 2010
-11.7 -0.6 -16.9 1.5 8.4 -5.3 -12.4 -20.0 -26.7 -12.3
Annualized
5-Year Change
Q4 2005-Q4 2010
-2.5 -0.1 -3.6 0.3 1.6 -1.1 -2.6 -4.4 -6.0 -2.6

Notes: These indices rely on data from only home-purchase transactions.

Classic CMHPI Series

Quarterly Change
Q3 2010-Q4 2010
-0.1 -0.2 -1.5 -0.8 -0.6 -0.8 -0.5 -1.1 -1.2 -0.8
Annualized
Quarterly Change
Q3 2010-Q4 2010
-0.2 -0.7 -5.8 -3.1 -2.2 -3.1 -2.0 -4.5 -4.6 -3.3
Annual Change
Q4 2009-Q4 2010
0.3 0.6 -2.6 -0.8 -0.6 -0.1 -0.5 -3.7 -1.3 -1.1
5-Year Change
Q4 2005-Q4 2010
-9.1 0.4 -8.5 8.3 12.3 -1.4 -5.7 -9.2 -20.0 -6.4
Annualized
5-Year Change
Q4 2005-Q4 2010
-1.9 0.1 -1.8 1.6 2.4 -0.3 -1.2 -1.9 -4.4 -1.3

Send comments and questions to . These data are available at www.freddiemac.com/finance/cmhpi

Opinions, estimates, forecasts and other views contained in this document are those of Freddie Mac’s Office of the Chief Economist, do not necessarily represent the views of Freddie Mac or its management, should not be construed as indicating Freddie Mac’s business prospects or expected results, and are subject to change without notice. Although the Office of the Chief Economist attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. The information is therefore provided on an “as is” basis, with no warranties of any kind whatsoever. © 2011 by Freddie Mac.

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Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world's capital markets to finance mortgages for families across America. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters

Contact:

(703) 903-3933

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