Freddie Mac's Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 0.4% decline from the fourth quarter of 2008 to the fourth quarter of 2009 – a much smaller decline than the 9.5% drop in home prices recorded in 2008. In the final quarter of 2009, the U.S. Index was down 1.4% (-5.4% annualized) relative to the third quarter, on a non-seasonally adjusted basis.
‘Low rates, coupled with the first-time home buyer tax credit, helped boost home sales to their highest level in two-and-a-half years, seasonally adjusted,’ says Frank Nothaft, Freddie Mac's vice president and chief economist. ‘We normally see a seasonal effect in the fourth-quarter price index that reduces its value. A year-over-year comparison largely controls for this. Over 2009, the national index dipped slightlyâ�¦ and four of nine regions posted price gains, with the Pacific region showing a third consecutive quarterly gain, as well as an annual increase in prices."
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 typically lag changes in the Purchase-Only series, Freddie Mac explains. The CMHPI Classic Series indicated that average U.S. home values fell 0.7% (-2.8% annualized) during the fourth quarter and depreciated 4.3% over 2009.
According to the CMHPI Purchase-Only Series, home prices in the Pacific division (Alaska, California, Hawaii, Oregon and Washington) rose 0.5% in the fourth quarter, with home values increasing 1.6% over the last 12 months. Values in both the East North Central division (Illinois, Indiana, Michigan, Ohio and Wisconsin) and the South Atlantic division (District of Columbia, Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) decreased 3.2% in the fourth quarter.
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, Freddie Mac explains.
SOURCE: Freddie Mac