U.S. Home Price Index Falls 2.5% in Q1, Largest Decline Since Winter 2008

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According to the Federal Housing Finance Agency (FHFA), U.S. house prices fell in the first quarter of 2011 to a seasonally adjusted purchase-only house price index (HPI).

The HPI is calculated using home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages, was 2.5 percent lower on a seasonally adjusted basis in the first quarter than in the fourth quarter of 2010. The unadjusted national decline was 3.5 percent. Over the past year, seasonally adjusted prices fell 5.5 percent from the first quarter of 2010 to the first quarter of 2011.

FHFA's seasonally adjusted monthly index for March was down 0.3 percent from its February value. The previously reported 1.6 percent decrease for February has been revised to a 1.5 percent price decline. The monthly index value for March was 19.8 percent below its peak value from April 2007.

FHFA has implemented relatively minor changes in the way it calculates the national and Census Division price indexes. Although the changes do not produce systematically different estimates, for specific time periods--including the latest month and quarter--there are differences. For example, the estimated monthly change in U.S. prices (seasonally adjusted) for March would have been 0.0 percent under the old methodology, as opposed to -0.3 percent under the new approach. For the quarterly purchase-only index, the old approach would have yielded a change of -3.0 percent (seasonally adjusted)--a slightly

larger decline than the 2.5 percent measured. Details behind the changes and a complete empirical evaluation are included in the "Highlights" section of this report (pages 10-16).

"House prices in the first quarter declined in most parts of the country," said FHFA Acting Director Edward J. DeMarco. "In many local real estate markets, particularly those hit hard by this cycle, foreclosures and other distressed properties are still a key factor in recorded and anticipated future sales and may be delaying price stability or recovery. Fortunately, serious delinquency rates also are declining."

FHFA's all-transactions house price index, which includes data from mortgages used for both home purchases and refinancings, decreased 2.7 percent in the latest quarter and is down 3.1 percent over the four-quarter period.

While the national, purchase-only house price index fell 5.5 percent from the first quarter of 2010 to the first quarter of 2011, prices of other goods and services rose 2.8 percent over the same period. Accordingly, the inflation-adjusted price of homes fell approximately 8.1 percent over the latest year.

Significant Findings:

• The seasonally adjusted purchase-only HPI declined in the first quarter in 42 states and the District of Columbia.

• Of the nine Census Divisions, the West South Central and Mountain Divisions experienced the most extreme price movements in the latest quarter. The Mountain Division experienced the largest decline, with a price drop of 3.4 percent. The strongest prices were in the West South Central Division, where prices declined only 0.5 percent.

• As measured with purchase-only indexes for the 25 most populated metropolitan areas in the U.S., four-quarter price declines were greatest in the Atlanta-Sandy Springs-Marietta, GA area. That area saw price declines of 13.5 percent between the first quarters of 2010 and 2011.

• Prices held up best in Pittsburgh, PA, where prices rose 0.2 percent over that period.

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