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Homes Lose More Value In Third Quarter

Largest annual fall in 39 years, according to Freddie Mac

December 2, 2008

Over the four quarters ending with the third quarter of 2008, home sales prices fell an average of 7.2 percent in the CMHPI -- the largest annual fall in values over the 39-year history of the series.

"The disruptions in the credit markets during the latter part of the third quarter have likely weakened housing demand and contributed to further declines in house prices," said Frank Nothaft, Freddie Mac vice president and chief economist. "With the unemployment rate having risen to 6.5 percent in October, there will likely be further weakening in housing demand, which could push the market bottom in home sales and housing starts out at least until middle to late next year and result in further declines in house prices."

The November forecast has the CMHPI declining 4.3 percent over the course of 2009.

"For the first time in the CMHPI series we saw every region of the nation experience declining home values over the quarter'" said Nothaft. "There is significant variation in the degree of the declines, ranging from a very small 0.1 percent annualized drop in values in the West South Central region to a 20 percent annualized loss in home values in Pacific states."

Seventeen states registered modest price gains over the past year, and five states had increases in the third quarter, according to the CMHPI Classic Series.

Annual price gains of 2 percent to 4 percent occurred in Alabama, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, and Texas, which have benefited from stronger local economies led in part by the petroleum, natural gas and ethanol industries.

Annual drops of more than 14 percent occurred in Arizona, California, Florida and Nevada, which have borne the brunt of the housing market woes.

The Conventional Mortgage Home Price Index shows the following regional performances:

• West South Central Division (AR, LA, OK, TX): dipped 0.03 percent (-0.1 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values increased 0.5 percent, and during the last five years, home values increased 25.9 percent.

• Middle Atlantic Division (NJ, NY, PA): decreased 0.1 percent (-0.3 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 2.2 percent, and during the last five years, home values increased 33.4 percent.

• West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 0.5 percent (-1.8 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 2.6 percent; over the last five years, home values increased 12.7 percent.

• East South Central Division (AL, KY, MS, TN): fell 1.1 percent (-4.2 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 1.3 percent, and during the last five years, home values increased 23.6 percent.

• New England Division (CT, MA, ME, NH, RI, VT): dropped 1.1 percent (-4.2 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 5.1 percent, and during the last five years, home values increased 13.9 percent.

• East North Central Division (IL, IN, MI, OH, WI): decreased 1.2 percent (-4.6 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 3.9 percent, and during the last five years, home values increased 5.7 percent.

• South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): fell 2.1 percent (-8.1 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 6.8 percent, and during the last five years, home values increased 27.6 percent.

• Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): declined 2.3 percent (-8.9 percent, annualized) in the third quarter of 2008. In the last 12 months, home values decreased 7.6 percent; during the last five years, home values increased 33.1 percent.

• Pacific Division (AK, CA, HI, OR, WA): decreased 5.4 percent (-19.9 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 20.2 percent, and during the last five years, home values have increased 18.0 percent.

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