Rate of Home Price Decline Slows

The rate of home price declines in markets across the US appears to be slowing. National home prices slipped 9.2% in May from a year earlier — the smallest year-over year decline recorded in 2009 and the lowest since December 2007 — according to an index calculated by First American CoreLogic. May’s national decline showed 50 bps of improvement over April’s downwardly adjusted 9.7% rate. The rate of national declines for single-family homes peaked at 11.9% in January and has since improved by more than 2.5 percentage points through May, with early data for June indicating “further improvements” to be seen. Broken down geographically, however, the declines don’t seem so optimistic, as First American CoreLogic reported 41 states experienced price declines, and 16 had double-digit declines. Nevada scored the worst yearly performance, with prices falling 26.4%. Florida followed closely with a 25.5% decline. California’s 19.8% annual decline showed improvement from recent indices, and is well below the state’s 30.3% peak in August 2008. New York showed a 3.14% annual price gain, while West Virginia gained 3.03% — potentially due in part reporting lags in these states that led to low transaction counts studied by First American CoreLogic. Eight other states posted price gains, ranging from 0.08% in Indiana and Missouri to 1.81% in South Dakota. “Although there has been some improvement in the national HPI, collateral risk will continue to be the main driver of the housing market for the remainder of 2009,” said Mark Fleming, chief economist for First American CoreLogic. “Until home prices and the economy stabilize, mortgage performance will continue to worsen and home sales activity will remain flat nationally through 2010.” May’s index also noted a divergence between single-family detached versus attached properties, which include condos and townhomes. These attached properties experienced average price declines of 12% from a year ago, compared with a 9.2% decline seen among detached homes. The gap, according to First American CoreLogic, indicates a weak condo market and tighter underwriting guidelines after the faster run-up in prices for these properties during the housing bubble. Write to Diana Golobay.

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