The Housing Chronicles Blog: OFEHO tracks steep decline in home prices for 1Q 2008

Thursday, May 22, 2008

OFEHO tracks steep decline in home prices for 1Q 2008

According to the Office of Federal Housing Enterprise Oversight (OFHEO), home prices fell faster during the first quarter of 2008 than they've fallen in the 17 years the group has been tracking the market. From a USA Today story:

The government says U.S. home prices posted a first-quarter decline bigger than any in the 17-year history of the data.

The Office of Federal Housing Enterprise Oversight (OFHEO) says home prices fell 3.1% in the first quarter compared with a year ago.

The index also fell 1.7% from fourth quarter 2007 to the first quarrter of 2008, largest quarterly price drop on record.

The report says prices fell in the first quarter in 43 states. Eight states had quarterly price declines of more than 3% and two — California and Nevada —saw prices decline more than 8%...

States with the greatest price appreciation between first quarter 2007 and first quarter 2008 were: Wyoming (6.3%), Utah (5.6%), Montana (4.9%), Texas (4.7%), and Alabama (4.5%).

States with the sharpest depreciation for the same period were: California (-10.6%), Nevada (-10.3%), Florida (-8.1%), Arizona (-5.5%), and Michigan (-3.1%).

The government index is calculated by tracking mortgage loans of $417,000 or less that are bought or backed by the government-sponsored mortgage-finance companies Fannie Mae and Freddie Mac. Legislation enacted in February temporarily raised the limit to as much as $729,750 in high-cost areas.

The government index focuses on less expensive properties and includes fewer houses bought with risky home loans that have gone sour over the past year.

Another reading that includes such properties and focuses on major U.S. cities, the Standard & Poor's/Case-Shiller has shown larger declines.

So how are these other indices different? Here's a quick primer:

Among the differences in the home price indexes:

  • The Standard & Poor's/Case-Shiller nationwide housing index focuses on major metropolitan areas and includes expensive properties as well as cheaper ones. The S&P/Case-Shiller indexes use only purchase prices gathering information from county assessor and recorder offices.
  • The OFHEO Home Price Index, more national in its scope, excludes higher-priced homes and ones financed by riskier mortgages, and it includes refinance appraisals. The OFHEO index is calculated solely using home loans of $417,000 or less that are bought or backed by government-sponsored mortgage companies Fannie Mae and Freddie Mac. That excludes properties bought with some of the riskier varieties of home loans that have gone sour this year.
  • The National Association of Realtors uses a median price of a home sold. Many economists consider the OFHEO and Case-Shiller indexes to be better measurements of the housing market than the Realtors' report, because both indexes examine price changes for the same properties over time instead of calculating a median price for houses sold during a particular month or quarter.

Source: AP, OFHEO

Want to see the entire list by state? Click here.

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