Housing Prices Increase in Third Quarter:FHFA

The first quarterly increase of housing prices since the second quarter of 2007 has some hoping that stabilization is on the horizon.

monthly change from July to August was estimated to be negative 0.3 percent but was changed to negative 0.5 percent. Seasonally adjusted prices dropped 3.8 percent during the 2009 third quarter, compared to the third quarter last year, and prices of other goods and services fell 2.8 percent. As a result, the inflation-adjusted price of houses fell approximately 1.0 percent from last year.

“These data provide some evidence of short-term stabilization in housing prices, a likely result of the many ongoing efforts to stabilize markets,” DeMarco said. “Given the headwinds facing markets, including high unemployment rates and continued high levels of delinquency and foreclosures, the longer-term view remains uncertain.”

The most significant price movements during the third quarter were seen in the Mountain Division where prices dropped 1.4 percent and the Pacific Division where prices increased 1.9 percent. Seasonally adjusted, purchase-only indexes indicated that prices rose in 19 states and the District of Columbia during the last quarter. Only seven of these states saw price increases over the last four quarters.

For the 25 most-populated Metropolitan Statistical Areas (MSAs) in the United States, purchase-only indexes showed four-quarter price declines were most prevalent in the Phoenix-Mesa-Scottsdale, Arizona MSA, where prices dropped 22 percent between the third quarter of 2008 and this year’s third quarter. During the same time period, prices remained strongest in the Denver-Aurora-Broomfield, Colorado MSA, where prices increased 3.3 percent.

According to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI), released Tuesday by FHFA acting director Edward J. DeMarco, housing prices grew modestly in the third quarter. Calculated using home sales price information from Fannie Mae and Freddie Mac, the HPI, on a seasonally adjusted basis, was 0.2 percent higher during the third quarter than during this year’s second quarter.

Unlike the purchase-only index, FHFA’s all-transaction HPI, including date from mortgages used for both home purchases and refinances, fell 2.4 percent between this year’s second and third quarter and 4.1 percent over the four-quarter period.