Price Decline Decelerates in Q2: Freddie Mac
Another indication that the decline in home prices is decelerating came out Tuesday, as the Freddie Mac (FRE) quarterly Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series increased 1.7% from Q209 to Q109. For the past 12 months ending in Q209, the index decreased 6.7%, better than the decrease of 8.5% between Q108 and Q109. The index is gleaned from housing price data from purchases mortgages, but not refinance mortgages. “The pickup in home price growth rates is consistent with other housing market indicators that show home sales and single-family construction up in the second quarter,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The lowest mortgage rates in a half-century have pushed housing affordability to the highest level in at least 40 years, helping to encourage buying." Nothaft added: "The spring is generally the strongest buying season each year, and we normally see home price growth respond similarly – this year was no exception. Moreover, the price gains were broad-based and for the first time in two years average home sales values rose at least a little bit in every region.” In a second Freddie Mac index, the CMHPI Classic Series, home values declined 4.5% over the past 12 months ending in Q209, a steeper drop than the 3.9 percent decline over the year ending in the first quarter of 2009. The Classic Series index takes refinance mortgages into account and bases values on property appraisals. Because of this, the index often lags the Purchase-Only Series index. The CMHPI found values are still down relative to their peaks. Average values in the New England, East North Central and Pacific divisions are at 2004 levels. “In contrast, the average value in the West South Central area is only slightly below its 2008 peak, while the index for the East South Central region is at about its 2006 level," Nothaft said. "Other areas have home-purchase values at 2005 levels.” Write to Austin Kilgore.