National Home Values Fall in First Quarter

For Immediate Release

May 29, 2008
Contact: corprel@freddiemac.com
or (703) 903-3933

Steepest Decline Since 1971

McLean, VA – Freddie Mac (NYSE: FRE) announced today that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 10.4 percent drop in U.S. home values during the first quarter of 2008 on an annualized basis, following a downward revised 9.9 percent annualized drop in the fourth quarter. Over the four quarters ending with the first quarter of 2008, home sales prices fell an average of 4.4 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series.

The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series, which includes data from both home purchase transactions and mortgage refinancings, with the latter home values based on appraisals. The CMHPI Classic Series indicated that home values fell 2.4 percent nationally during the first quarter on an annualized basis, the steepest quarterly decline since 1971. Over the year ending with the first quarter, home values depreciated 0.8 percent on average in the Classic Series, the first annual drop in this index over the 39 years spanned by the series.

"Particularly striking has been the depth and breadth of home-value decline across the U.S." said Frank Nothaft, Freddie Mac vice president and chief economist. "In the past we have seen regions that were still appreciating while the national average had registered a decline. In the CMHPI Purchase-Only Series we saw all nine regions of the country experience price declines at the same time, though to different degrees: During the first quarter, house prices dipped an average of 0.5 percent in the West South Central states but fell an average of 6.9 percent for states in the Pacific division.

“While we expect to see further declines in average home values throughout this year and into 2009, we will be watching very carefully for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales, now that the traditional home-buying season spanning late spring and early summer is underway.”

Forty-six states registered price declines in the first quarter and 29 states had declines measured from the same time a year ago, according to the CMHPI Purchase-Only Series. Montana, North Dakota, South Carolina and Wyoming had modest price gains during the first quarter. In general, states in which the local economy remained more vibrant tended to have better home-value performance than other states.

Based on annualized quarterly growth rates in the CMHPI Purchase-only Series, the West South Central states showed the smallest decline in home sales prices over the first quarter at a -1.9 percent rate. The Middle Atlantic states experienced the second smallest drop in home prices of -4.1 percent, followed by the East South Central states which posted a -4.3 percent change. Two divisions tied for the median change in home values at -5.9 percent: East North Central and Mountain. The West North Central division recorded a change of -8.6 percent in home prices and three regions showed double digit declines: South Atlantic at -10.1 percent, New England at -11.0 percent and Pacific at -24.8 percent.

The Conventional Mortgage Home Price Index Classic Series shows the following regional performances:

West South Central Division (AR, LA, OK, TX): decreased 0.5 percent (-1.9 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values increased 1.6 percent, and during the last five years, home values increased 26.8 percent.
Middle Atlantic Division (NJ, NY, PA): decreased 1.1 percent (-4.1 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 0.2 percent, and during the last five years, home values increased 44.3 percent.
East South Central Division (AL, KY, MS, TN): decreased 1.1 percent (-4.3 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values increased 0.3 percent, and during the last five years, home values increased 26.6 percent.
East North Central Division (IL, IN, MI, OH, WI): decreased 1.5 percent (-5.9 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 3.8 percent, and during the last five years, home values increased 9.2 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): decreased 1.5 percent (-5.9 percent, annualized) in the first quarter of 2008. In the last 12 months, home values decreased 3.3 percent; during the last five years, home values increased 44.0 percent.
West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 2.2 percent (-8.6 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 2.3 percent; over the last five years, home values increased 16.3 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): decreased 2.6 percent (-10.1 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 4.4 percent, and during the last five years, home values increased 37.8 percent.
New England Division (CT, MA, ME, NH, RI, VT): decreased 2.9 percent (-11.0 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 4.0 percent, and during the last five years, home values increased 22.2 percent.
Pacific Division (AK, CA, HI, OR, WA): decreased 6.9 percent (-24.8 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 12.4 percent, and during the last five years, home values have increased 40.1 percent.

Jointly developed by Freddie Mac and Fannie Mae and first published by Freddie Mac starting in 1994, the Conventional Mortgage Home Price Index features indexes for the nine Census divisions as well as a national index. The national index is the average of the nine divisional indexes weighted by the distribution of one-unit detached, single-family structures in each Census division.

Unlike other home price indexes based on mean or median values of homes sold during a given period, the Conventional Mortgage Home Price Index 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 funded by the two secondary mortgage market firms are first 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 34 million records in the repeat-transactions database used to construct the classic Conventional Mortgage Home Price Index - this database includes transactions on one-unit detached and single-family townhome properties serving as collateral on loans originated through the first quarter of 2008 and purchased by Freddie Mac and Fannie Mae by April 30, 2008.

Freddie Mac publishes the Conventional Mortgage Home Price Index each quarter. Index values and growth rates 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 under the classic series of the CMHPI are available and the purchase-transaction only series is 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 is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.

Conventional Mortgage Home Price Index
Q1 2008 Release
All Entries Are Percent Changes	New England	Middle Atlantic	South Atlantic	East South Central	West South Central	West North Central	East North Central	Mountain	Pacific	The United States

Quarterly Change Q4 2007-Q1 2008	-0.1	0.1	-0.7	0.8	0.4	0.5	0.7	-0.3	-3.4	-0.6

Annualized Quarterly Change Q4 2007-Q1 2008	-0.2	0.5	-2.7	3.1	1.7	2.0	2.7	-1.3	-12.8	-2.4

Annual Change Q1 2007-Q1 2008	-0.9	0.7	-1.5	3.8	3.9	1.4	0.8	0.5	-6.4	-0.8

5-Year Change Q1 2003-Q1 2008	35.1	53.9	53.3	31.2	29.7	26.6	21.0	50.5	60.1	41.5

Annualized 5-Year Change Q1 2003-Q1 2008	6.2	9.0	8.9	5.6	5.3	4.8	3.9	8.5	9.9	7.2

Purchase-Only Transactions Series
Q1 2008 Release
All Entries Are Percent Changes	New England	Middle Atlantic	South Atlantic	East South Central	West South Central	West North Central	East North Central	Mountain	Pacific	The United States

Quarterly Change Q4 2007-Q1 2008	-2.9	-1.1	-2.6	-1.1	-0.5	-2.2	-1.5	-1.5	-6.9	-2.7

Annualized Quarterly Change Q1 2007-Q1 2008	-11.0	-4.1	-10.1	-4.3	-1.9	-8.6	-5.9	-5.9	-24.8	-10.4

Annual Change Q1 2007-Q1 2008	-4.0	-0.2	-4.4	0.3	1.6	-2.3	-3.8	-3.3	-12.4	-4.4

5-Year Change Q1 2003-Q1 2008	22.2	44.3	37.8	26.6	26.8	16.3	9.2	44.0	40.1	29.7

Annualized 5-Year Change Q1 2003-Q1 2008	4.1	7.6	6.6	4.8	4.9	3.1	1.8	7.6	7.0	5.3

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

Send comments and questions to chief_economist@freddiemac.com

Although Freddie Mac attempts to provide reliable, useful information in this document, Freddie Mac does not guarantee that the information is accurate, current or suitable for any particular purpose. Estimates contained in this document are those of Freddie Mac currently and are subject to change without notice.

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