Home Values Decline In Third Quarter

MCLEAN, Va., Nov. 30, 2010 /PRNewswire/ -- Freddie Mac (OTC Bulletin Board: FMCC) announced today the results of its third 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 1.9 percent decrease (-7.4 percent annualized) in the third quarter relative to the second quarter on a not-seasonally-adjusted basis.  U.S. home values fell 3.1 percent relative to the third quarter a year ago.
• Home values fell in eight of nine Census Divisions, rising only in the New England Division.
• The revised change in home values for the second quarter of 2010 is an increase of 2.8 percent (11.8 percent annualized) relative to the first quarter of 2009 and a decrease of 0.5 percent relative to the second quarter of 2009.
• The CMHPI Classic Series, which includes data on both home purchase values and appraisals, indicated that average U.S. home values rose 1.4 percent (5.6 percent annualized) during the third quarter.  Comparing the third quarter of 2010 with the third quarter of 2009, the Classic Series shows 1.0 percent depreciation.

Quotes

Attributed to Amy Crews Cutts, Freddie Mac deputy chief economist

• "Home sales in the third quarter declined from the second quarter, in part because of the expiration of the home-buyer tax credit.  Although sales rose in August and September, the net decline over the quarter was still large.  We're now seeing the effect of the sales slow-down in home purchase prices.
• "Distressed sales, including foreclosed properties and short sales, are still a big part of the market.  The past three quarters we've seen encouraging numbers in delinquency trends as reported by the Mortgage Bankers Association, though the delinquency rates remain high.  Our forecast is for economic conditions to continue to improve, which should lower delinquency rates further over the coming year and relieve some of the downward pressure on home prices."

Regional Summary

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

• New England Division (CT, MA, ME, NH, RI, VT): increased 0.3 percent (1.1 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 0.5 percent, and during the last five years, home values declined 10.3 percent.
• East South Central Division (AL, KY, MS, TN):  fell 0.6 percent (−2.3 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 1.9 percent, and during the last five years, home values increased 5.6 percent.
• Middle Atlantic Division (NJ, NY, PA):  decreased 0.6 percent (−2.5 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 0.6 percent, and during the last five years, home values increased 1.9 percent.
• West South Central Division (AR, LA, OK, TX): fell 0.8 percent (−3.1 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values increased 0.2, and during the last five years, home values increased 13.6 percent.
• East North Central Division (IL, IN, MI, OH, WI):  fell 1.7 percent (−6.4 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 3.6 percent, and during the last five years, home values decreased 10.2 percent.
• West North Central Division (IA, KS, MN, MO, ND, NE, SD):  decreased 1.7 percent (−6.7 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 1.9 percent; over the last five years, home values fell 2.2 percent.
• Pacific Division (AK, CA, HI, OR, WA):  fell 2.4 percent (−9.3 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 2.6 percent, and during the last five years, home values have decreased 20.7 percent.
• South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV):  declined 3.2 percent (−12.2 percent, annualized) in the third quarter of 2010.  Over the last 12 months, home values decreased 6.3 percent, and during the last five years, home values fell 12.0 percent.
• Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY):  decreased 4.9 percent (−18.1 percent, annualized) in the third quarter of 2010.  In the last 12 months, home values decreased 8.3 percent; during the last five years, home values declined 13.7 percent.

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 third quarter of 2010 and purchased by Freddie Mac or Fannie Mae by October 31, 2010.
• Freddie Mac publishes the CMHPI each quarter.  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.

Related Links

www.freddiemac.com

www.freddiemac.com/news/finance

www.freddiemac.com/finance/cmhpi

www.freddiemac.com/pmms

www.MBAA.org/ResearchandForecasts/ProductsandSurveys/NationalDelinquencySurvey.htm

SOURCE Freddie Mac