National Home Price Declines Continue to Improve

National Housing Prices Fell 9.2 Percent in May Compared to a Year Ago

Date: 07/20/2009

National housing prices fell 9.2 percent in May compared to a year ago representing the smallest year-overyear decline recorded in 2009 and the lowest since December 2007, according to newly released data from First American CoreLogic and its LoanPerformance Home Price Index (HPI). May’s decline was a 0.5 percent improvement over the 9.7 percent decline in April.*

• The rate of national price declines for residential single-family detached properties peaked at 11.9 percent in January 2009 and has since improved by over 2.5 percentage points through May. The June preview data suggests further improvements in the rate of decline.
• Since U.S. home prices peaked in July 2006, national home prices have declined 20.1 percent on a cumulative basis.
• Despite the improvement in the national trend, the geographic breadth of price declines has not improved. Forty-one states experienced price declines, and 16 states had double-digit declines in May, well above the number of states experiencing declines a year ago.
• Nevada (-26.4 percent) remained the top-ranked state for annual price depreciation with Florida (-25.5 percent) close behind. California’s (-19.8 percent) price trends continued to improve in May and is currently more than 10 percentage points better than the peak decline of 30.3 percent set in August 2008. Arizona (-18.1 percent) and Illinois (-16.9 percent) round out the top five states for price declines. Florida and Illinois are the only two states that are not currently showing signs of moderation or improvement in the declines among states experiencing the largest price decreases.
• Over the past few months there has been a divergence in single-family detached residential properties as compared to single-family attached residential properties, which include condos and townhomes. As of May, prices of attached properties declined 12.0 percent from a year ago, compared to a 9.2 percent decrease for detached properties. The gap reflects the very weak condo market, tighter underwriting guidelines for this type of property, and the faster run-up in prices for condos during the bubble market.

"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."

* April’s decline was revised downward from 10.2 percent to 9.7 percent.

LoanPerformance HPI Ranking Among the Country’s Largest CBSAs:

Source: First American CoreLogic, LoanPerformance HPI, Single-Family Detached as of May, 2009

LoanPerformance HPI State and National Rankings:

*NY and WV state transaction counts are extremely low due to county level reporting lags. Significant downward revisions to the reported NY HPI data are expected as new county public record data is released. Source: First American CoreLogic, LoanPerformance HPI, Single-Family Detached as of May 2009.

Methodology:

The First American CoreLogic LoanPerformance HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 45 million observations sourced from First American CoreLogic’s industry-leading property information database. LoanPerformance HPI provides a multi-tier market evaluation based on price, time between sales, property type and loan type (conforming vs. nonconforming). The LoanPerformance HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The LoanPerformance HPI provides the most comprehensive set of monthly home price indices and median sales prices available covering 7,668 ZIP codes, 958 Core Based Statistical Areas (CBSAs) and 678 counties located in all 50 states and the District of Columbia. Full-month May through mid-month June 2009 state and top CBSA-level data can be found at www.loanperformance.com/products/hpi.aspx.

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