Sharpest Declines in California, Nevada and Florida;
Small Price Increases in Strongest Markets

U.S. home prices fell in the first quarter of 2008 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.7 percent lower on a seasonally-adjusted basis in the first quarter than in the fourth quarter of 2007. This decline exceeded the 1.4 percent price decline between the third and fourth quarters of 2007 and is the largest quarterly price decline on record. Over the past year, prices fell 3.1 percent between the first quarter of 2007 and the first quarter of 2008. This is the largest decline in the purchase only index’s 17-year history.

OFHEO’s all-transactions House Price Index (HPI) which includes data from home sales and appraisals for refinancings, showed less weakness than the purchase-only index. The all-transactions HPI fell 0.2 percent in the latest quarter and was flat over the four-quarter period.

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends. “These substantial home price declines bring positive and negative news,” said Lockhart. “For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets. To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates“.

Both OFHEO’s purchase-only index and its all-transactions index show much more muted price declines than do other house price indexes. “While house price declines are widespread, homes financed with prime, conforming mortgages continue to hold up better than those financed with other types of mortgages, a phenomenon we’ve been observing for the last several quarters,” Lockhart said.

With this release, OFHEO continues its publication of its monthly price index, which was introduced in February. Monthly price trends are shown on pages 8 and 9 and are provided for months through March. Between February and March, prices fell 0.4 percent nationally on a seasonally-adjusted basis, and they have fallen a total of 3.7 percent since their April 2007 peak.

U.S. home prices rose approximately 0.6 percent on a seasonally adjusted basis between January and February, according to OFHEO’s new monthly House Price Index. For the 12 months ending in February, U.S. prices fell 2.4 percent. Since its peak in April 2007, the index is down 3.1 percent.

The OFHEO monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. The index, introduced in OFHEO’s fourth quarter 2007 House Price Index (HPI) report, provides a timely indicator of house price conditions for the nation and each of the nine Census Divisions. For the nine Census Divisions, seasonally-adjusted monthly price changes from January to February ranged from -0.6 percent in the Mountain Census Division to 2.2 percent in the New England Division.

Changes in the national index, which is constructed as a weighted average of data from the nine Census Divisions, reflect movements in market prices as well as changes in the mix of geographic areas within Census Divisions. Normally changes in the mix are relatively small. However, in February, the share of reported sales volumes rose in states with stronger housing markets, which significantly increased estimated appreciation above what it would have been in the absence of such effects. Holding the weights for each state constant, the national increase would have been only 0.3 percent in February.

Monthly index values and appreciation rate estimates are provided in the table and graph on the following pages. All estimates are seasonally adjusted and, as with OFHEO’s quarterly HPI, will be revised in later releases. As indicated in OFHEO’s fourth quarter 2007 House Price Index (HPI) report, quarterly HPI releases will include updated monthly data presented in the same format as the attached table.

For detailed information concerning the new monthly HPI, please see the HPI Frequently Asked Questions (FAQs), at http://www.ofheo.gov/hpi.aspx?Nav=60. The next release of monthly index data will be included as part of OFHEO’s next quarterly HPI, released May 22, 2008. That release will include quarterly index data through the first quarter of 2008 and will report monthly estimates through March. Please e-mail ofhe...@ofheo.gov for a printed copy of this report.

Pockets of Strength Remain; Coasts, Midwest Show Biggest Declines

WASHINGTON, DC – U.S. home prices fell in the fourth quarter of 2007 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.3 percent lower on a seasonally-adjusted basis in the fourth quarter than in the third quarter of 2007. This decline was substantially greater than the 0.3 percent price decline between the second and third quarters. Over the past year, prices fell 0.3 percent, as the fourth quarter decline erased earlier price gains.

OFHEO’s all-transactions House Price Index (HPI), which includes data from home sales and appraisals for refinancings, showed less weakness than the purchase-only index. The all-transactions HPI rose 0.1 percent over the latest quarter and 0.8 percent over the latest year.

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends. “Although prices for home purchases in the quarter fell in every state except Maine, only 16 states plus the District of Columbia showed price declines for the full year 2007,” said Lockhart. “While the market weakness is most significant in areas that saw the greatest price run-ups during the boom, other states have clearly not been immune to recent declines.”

“The year 2007 showed the first four-quarter decline in the purchase-only index since its earliest data in 1991,” Lockhart added. “However, both OFHEO’s purchase-only index and the all-transactions index show relatively greater house price stability than do other nationwide house price indexes. That may reflect, in part, the greater stability in the prime, conforming mortgage market served by the Enterprises than in other segments of the mortgage market,” said Lockhart.

New in this release are monthly purchase-only indexes through December 2007 for the nine Census Divisions and the U.S. The new series indicates that seasonally adjusted prices declined 0.2 percent in December across the U.S., on average. This is the sixth consecutive monthly decline, bringing the total drop from the April 2007 peak to 2.4 percent.

“Given the recent turmoil in housing markets we thought it would be helpful to provide a greater amount of information about price trends,” Lockhart said.

Beginning in March and on a monthly basis thereafter, OFHEO will provide news releases containing updated monthly indexes, with a two-month lag. For example, the March release will include January data. OFHEO’s quarterly house price releases will continue and will include both the quarterly and monthly information.

Nationally, house prices grew at a much slower rate over the last year than did prices of non-housing goods and services. While the national purchase-only house price index fell 0.3 percent between the fourth quarters of 2006 and 2007, prices of other goods and services rose 4.3 percent. The real price of homes thus fell 4.6 percent over the latest four quarters.

“While the declines are significant and quite large in some areas, the market still needs to work through its overhang of unsold inventory,” said OFHEO Chief Economist Patrick Lawler. “How much further down that inventory will ultimately push prices will depend on a number of factors, including what happens to interest rates and the overall health of the U.S. economy,” Lawler said.

Significant Findings:

Purchase-only Index:

1. The four-quarter decline in the purchase-only index was the first since at least 1991Q1 (the first period covered by that index).

2. Prices fell between the third and fourth quarters in every state except Maine.

3. Every Census Division also experienced a price decline between the third and fourth quarters. Prices were weakest in the Pacific Census Division, which experienced a 4.5 percent price decline in the quarter.

All- transactions HPI:

4. The states with the greatest rates of appreciation between the fourth quarter of 2006 and the fourth quarter of 2007 were: Utah (9.3%), Wyoming (8.3%), North Dakota (7.9%), Montana (6.9%), and Alaska (6.0%). The states with the lowest rates of appreciation for the same period were: California (-6.6%), Nevada (-5.9%), Florida (-4.7%), Michigan (-4.3%), and Rhode Island (-2.6%).

5. The Metropolitan Statistical Areas (MSAs) with the greatest rates of appreciation between the fourth quarter of 2006 and the fourth quarter of 2007 were: Wenatchee, Washington (13.7%), Houma-Bayou, Louisiana (12.2%), and Grand Junction, Colorado (12.0%). The MSAs with the lowest rates of appreciation for the same period were: Merced, California (-19.0%), Modesto, California (-15.5%), and Stockton, California (-15.3%).

6. Of the 291 cities on OFHEO’s list of “ranked” MSAs, 192 had positive four-quarter appreciation and 99 had price declines.

7. Of the 20 ranked cities with the greatest price declines over the latest four quarters, all but two were in California or Florida (Nevada and Michigan accounted for the remainder).

The complete list of state appreciation rates can be found on pages 25 and 26. The complete list of city (MSA) appreciation rates is available on pages 32 – 49.

Highlights

Details concerning the new monthly indexes can be found in the “Highlights” section of this report.

The Highlights section also includes a description of some technical changes that have been made to the way in which OFHEO’s national indexes are computed. The changes improve the weighting system that is used in constructing the index, but generally do not have a dramatic impact on index estimates.

Background

OFHEO’s purchase-only and all-transactions house price indexes track average house price changes in repeat sales or refinancings of the same single-family properties. The purchase-only index is based on more than five million repeat sales transactions, while the all-transactions index includes more than 34 million repeat transactions. Both indexes are based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over the past 32 years.

OFHEO analyzes the combined mortgage records of Fannie Mae and
Freddie Mac, which form the nation’s largest database of conventional, conforming mortgage transactions. The conforming loan limit for mortgages purchased in 2007 was $417,000 and remained at that level in the first month of 2008. Legislation enacted earlier this month has raised it on a temporary basis to as much as $729,750 in high cost areas. The data reported here do not reflect this change.

This HPI report contains four tables: 1) A ranking of the 50 States and Washington, D.C. by House Price Appreciation; 2) Percentage Changes in House Price Appreciation by Census Division; 3) A ranking of 291 MSAs and Metropolitan Divisions by House Price Appreciation; and 4) A list of one-year and five-year House Price Appreciation rates for MSAs not ranked.

OFHEO’s full PDF of report is at:
www.ofheo.gov/media/pdf/4q07hpi.pdf. Also, be sure to visit www.ofheo.gov to use the OFHEO House Price calculator. Please e-mail ofhe...@ofheo.gov for a printed copy of the report. The next monthly house price index report will be released on March 25, 2008 and the next quarterly HPI report will be posted May 22, 2008.

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OFHEO’s mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac.

HOUSE PRICES WEAKEN FURTHER IN MOST RECENT QUARTER

First Quarterly Price Decline for U.S. since 1994

Washington , DC – For the first time in nearly thirteen years, U.S. home prices experienced a quarterly decline. The OFHEO House Price Index (HPI), which is based on data from sales and refinance transactions, was 0.4 percent lower in the third quarter than in the second quarter of 2007. This is similar to the quarterly decline of 0.3 percent (seasonally-adjusted) shown in the purchase-only index. The annual price change, comparing the third quarter of 2007 to the same period last year showed an increase of 1.8 percent , the lowest four-quarter increase since 1995. OFHEO’s purchase-only index, which is based solely on purchase price data, indicates the same rate of appreciation over the last year.

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends.

“While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said Lockhart. “Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.”

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