December Home Price Index Shows Narrowing Decline, Slowed Recovery According to Newly Released First American CoreLogic Data

Home Prices Exhibit “Improving Declines”

Date: 02/18/2010

National home prices, including distressed sales, declined by 3.7 percent in December 2009 compared to December 2008, according to First American CoreLogic and its LoanPerformance Home Price Index (HPI). This was a significant improvement over November’s year-over-year price decline of 5.3 percent.* Excluding distressed sales, year-over-year prices declined in December by 3.3 percent; and in November the non-distressed HPI fell by 5.0 percent year-over-year. This improvement is taking place as the real estate market is getting further from the period of peak distress in home prices. On a month-over-month basis the national average of home prices declined moderately, falling by 1.0 percent in December 2009 compared to November 2009, indicating seasonal slowing in a fledging housing recovery.

The peak-to-trough decline (from April 2006 to March 2009) for the national index including distressed sales has been revised from -34.2 percent to -31.8 percent based on additional data included.**

Forecast Shows Continued Short-term Declines
First American CoreLogic’s forecast continues to project declining house prices into the spring months. The national HPI is projected to fall an average of 4.4 percent through April 2010, as high levels of unemployment, housing inventories and foreclosures continue to exert downward pressure on prices. The forecast indicates that April will be a critical month for the housing market, given the current scheduled expiration of the federal homebuyer tax credit. While the tax credit provided some significant support to house prices in 2009, the forecast model currently indicates that the future path of house prices after April will be significantly impacted by whether the tax credit is allowed to expire or is once again extended. Nationally, the HPI 12-month forecast is expected to be up 3.5 percent excluding distressed sales; and up 2.7 percent including distressed sales by December 2010.

Highlights as of December 2009

• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2009) is -28.2 percent. Excluding distressed properties, the peak-to-current change in the HPI is -21.5 percent.
• When distressed sales were included, Nevada (-20.8 percent) remained the top-ranked state for annual price depreciation in December, followed by Arizona (-12.6 percent), Idaho (-11.4 percent), Florida (-11.3 percent) and Michigan (-10.8 percent). Of these five states, all but Michigan showed month-over-month decreases in their HPI between November and December 2009.
• Excluding distressed sales, the worst five states for year-over-year price declines changes slightly. Nevada (-18.8 percent) still holds the top spot, followed by Arizona (-11.8 percent), Florida (-10.3 percent), Michigan (-10.0 percent) and Maine (-9.1 percent).

"The housing market, after experiencing stabilization in many, but not all, markets in the spring and summer of 2009 is going through the typical seasonal winter malaise," said Mark Fleming, chief economist for First American CoreLogic. "The big unknown for the 2010 spring selling season continues to be the future of the federal home buyer tax credit," he said.

Read more: February 2010 HPI Media Alert

*November’s decline was revised downward from –5.7 percent to –5.3 percent to reflect updated public record data. Revisions with public record data are standard, and to ensure accuracy, First American CoreLogic incorporates the newly released public data to provide updated results.

** The database has been expanded to include additional records, and as a result, the LoanPerformance HPI historical data has been revised accordingly.