National Home-Value Drop Accelerated in Fourth Quarter
February 27,
2009
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corprel@freddiemac.com
or (703) 903-3933
Home Value Declines Felt In Every Region Over Past Four Quarters
McLean, VA – Freddie Mac (NYSE: FRE) announced today that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 17.9 percent annualized decline in U.S. house prices during the fourth quarter of 2008, following a downward revised 8.0 percent annualized drop in the third quarter. Over the four quarters ending with the fourth quarter of 2008, home sales prices fell an average of 9.5 percent in the CMHPI Purchase-only Series – the largest annual decrease in its 39-year history.
“The deepening recession and the large inventory of for-sale homes continued to push home values down,” said Frank Nothaft, Freddie Mac vice president and chief economist. “While historically low interest rates on long-term fixed-rate mortgages help the housing market, demand for homes was weakened by rising unemployment, wealth declines from declining stock market valuations, and general lack of consumer confidence.
“For the second consecutive quarter in the CMHPI Purchase-only series every region of the nation experienced flat or declining home values over the quarter, but the fourth quarter of 2008 marks the first time that year-over-year declines in home values were recorded in each of the nine regions of the country. The range of experience was wide, though, with the West South Central area experiencing declines of one-tenth of one percent over the year while the Pacific region had a decline of 23 percent.”
The CMHPI Purchase-Only Series excludes all refinancings 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 lag changes in the Purchase-only. The CMHPI Classic Series indicated that home values fell 1.9 percent nationally during the fourth quarter on an annualized basis, a significantly slower rate than the revised third quarter decline of 11.5 percent. Over the year ending with the fourth quarter, home values depreciated 6.0 percent on average in the Classic Series, the sharpest annual drop in this index over the 39 years spanned by the series.
The Conventional Mortgage Home Price Index (Purchase-Only) Series shows the following regional performances:
West South Central Division (AR, LA, OK, TX): dipped 1.6 percent (–6.4 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 0.1 percent, and during the last five years, home values increased 23.5 percent.
East South Central Division (AL, KY, MS, TN): fell 2.3 percent (–9.0 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 2.7 percent, and during the last five years, home values increased 19.8 percent.
Middle Atlantic Division (NJ, NY, PA): decreased 2.7 percent (–10.3 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 4.1 percent, and during the last five years, home values increased 27.2 percent.
West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 3.0 percent (–11.6 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 3.8 percent; over the last five years, home values increased 9.1 percent.
New England Division (CT, MA, ME, NH, RI, VT): dropped 3.3 percent (–12.5 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 6.6 percent, and during the last five years, home values increased 7.3 percent.
East North Central Division (IL, IN, MI, OH, WI): decreased 4.9 percent (–18.3 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 5.8 percent, and during the last five years, home values decreased 0.1 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): declined 5.0 percent (–18.7 percent, annualized) in the fourth quarter of 2008. In the last 12 months, home values decreased 9.2 percent; during the last five years, home values increased 24.6 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): fell 6.5 percent (–23.5 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 11.4 percent, and during the last five years, home values increased 16.7 percent.
Pacific Division (AK, CA, HI, OR, WA): decreased 8.1 percent (–28.5 percent, annualized) in the fourth quarter of 2008. Over the last 12 months, home values decreased 23.0 percent, and during the last five years, home values have increased 4.6 percent.
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 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 39.5 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 fourth quarter of 2008 and purchased by Freddie Mac and Fannie Mae by January 31, 2009.
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 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 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q4 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 Q3 2008-Q4 2008 |
-3.3 | -2.7 | -6.5 | -2.3 | -1.6 | -3.0 | -4.9 | -5.0 | -8.1 | -4.8 |
| Annualized Quarterly Change Q3 2008-Q4 2008 |
-12.5 | -10.3 | -23.5 | -9.0 | -6.4 | -11.6 | -18.3 | -18.7 | -28.5 | -17.9 |
| Annual Change Q4 2007-Q4 2008 |
-6.6 | -4.1 | -11.4 | -2.7 | -0.1 | -3.8 | -5.8 | -9.2 | -23.0 | -9.5 |
| 5-Year Change Q4 2003-Q4 2008 |
7.3 | 27.2 | 16.7 | 19.8 | 23.5 | 9.1 | -0.1 | 24.6 | 4.6 | 12.8 |
| Annualized 5-Year Change Q4 2003-Q4 2008 |
1.4 | 4.9 | 3.1 | 3.7 | 4.3 | 1.8 | 0.0 | 4.5 | 0.9 | 2.4 |
| Classic CMHPI Series | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q4 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 Q3 2008-Q4 2008 |
0.0 | -0.3 | -1.5 | 0.3 | 0.1 | 0.4 | 0.6 | 0.0 | -1.8 | -0.5 |
| Annualized Quarterly Change Q3 2008-Q4 2008 |
0.0 | -1.3 | -5.8 | 1.4 | 0.3 | 1.6 | 2.6 | -0.1 | -6.9 | -1.9 |
| Annual Change Q4 2007-Q4 2008 |
-4.5 | -3.2 | -6.6 | 1.1 | 1.4 | -1.3 | -2.6 | -5.4 | -17.0 | -6.0 |
| 5-Year Change Q4 2003-Q4 2008 |
18.0 | 35.5 | 34.0 | 27.5 | 27.4 | 17.3 | 11.7 | 36.2 | 23.6 | 25.1 |
| Annualized 5-Year Change Q4 2003-Q4 2008 |
3.4 | 6.3 | 6.0 | 5.0 | 5.0 | 3.2 | 2.2 | 6.4 | 4.3 | 4.6 |
Send comments and questions to chief_economist@freddiemac.com. These data are available at www.freddiemac.com/news/finance
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. Information from this document may be used with proper attribution. Alteration of this document is strictly prohibited. © 2009 by Freddie Mac.
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