FHFA Home Price Index Records Largest Quarterly Drop in Over a Year
By: Carrie Bay
The Federal Housing Finance Agency (FHFA) reports that home prices nationally dropped 0.8 percent in the fourth quarter of 2010 when compared to the previous three-month period.
FHFA’s index is calculated using home sales price information from mortgages acquired by Fannie Mae and Freddie Mac.
On a year-over-year basis, the agency’s fourth-quarter home price measurement is down 3.9 percent. According to FHFA’s report, it’s the largest annual decline recorded since the third quarter of 2009. Home prices have come in below their year-ago levels for 13 consecutive quarters now.
The ongoing depreciation is being attributed, in part, to an elevated number of distressed properties weighing heavy
on surrounding home prices, as well as lingering unemployment which has dampened consumer confidence and demand.
FHFA says while its national house price index fell 3.9 percent from the fourth quarter of 2009 to the fourth quarter of 2010, prices of other goods and services rose 1.8 percent over the same period. Accordingly, the inflation-adjusted price of homes fell approximately 5.7 percent over the latest year.
Among the most significant findings of its study, FHFA says the home price index declined in the fourth quarter in 35 states plus the District of Columbia. Prices rose in the latest quarter in 15 states. (Details on specific state data can be found here.)
Of the nine Census divisions, the East North Central division and the Mountain division experienced the most significant price movements in the latest quarter.
While prices rose 0.1 percent in New England, prices fell 2.2 percent in the Mountain region.
Drilling down to the metro area, FHFA says price declines were greatest in the Phoenix-Mesa-Glendale, Arizona area, which saw prices drop 15.3 percent between the fourth quarters of 2009 and 2010.
Prices held up best in the Denver-Aurora-Broomfield, Colorado area, where prices rose 3.7 percent over that period.
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