Distressed Sales Continued to Drag Down U.S. Home Prices in Q4, Says Freddie Mac

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This week Freddie Mac (OTC: FMCC) announced the results of its fourth quarter Conventional Mortgage Home Price Index (CMHPI) Report, which showed  a continued decline in U.S. home values for the fourth quarter of 2010 as a result of distress property sales in the same period.

Freddie Mac's chief economist Frank Nothaft said, "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."

Report Highlights Include:

• 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.

Nothaft further stated, "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."

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.

 

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