US House Price Decline-Federal Housing Finance Agency’s House Price Index

Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (monthly) was down 0.3% in March.  The FHFA quarterly index was also 2.5% lower in Q1 2011 when compared to Q4 2010.  The index is down 19.8% from the April 2007 peak.

 Chart.1 House Prices Continue to Slide

fhfa house price index

Chart.1 highlights the continued slide in the USA house prices as measured by FHFA monthly seasonally adjusted index.  In fact, house prices have declined to their January 2004 level. In addition, the annual growth rate has continued to decline. From November 2008 to November 2009, the rate of decline in house prices had slowed due to tax incentives offered to first time buyers. Post to the 2009 decline in house prices has accelerated.

 Chart.2 Decline is Broad Based – Since April 2007 Peak

federal Agency House price index

Chart.2 shows the house price performance of census division indices rebased to April 2007 peak. Evident, is the decline in the Pacific division. Table.1 reports the states that compromise each division. The pacific division has under-performed the all other regions. On the other hand, West South Central region has faired better than the other regions.

Table.1Census Division Regions House Price Performance since April 2007 Peak

Summary

The geographical distribution of excess housing inventory may explain the disparity in spatial house price performance. This could be due to different planning regimes. Tighter planning frequently result in lower levels of construction.. Another explanation has been that regions where the agricultural sector contributes a significant portion to economic production have experienced a moderate decline in house price.

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