FHFA Reports Slight Gain in Home Prices

Coupled with a downward revision of June's figures, today's data shows the housing market remains weak, despite a general perception that prices have bottomed out. The June figures were reduced to a 0.1 percent increase from an originally reported 0.6 percent gain. All figures are seasonally adjusted.

The FHFA report is based on purchase prices of home sales backed by secondary lenders Fannie Mae and Freddie Mac, which account for 80 percent of the U.S. residential mortgage market.

Home prices down 10.5 percent from last year

Overall, U.S. home prices declined 4.2 percent from July 2008 and are down 10.5 percent from their peak in August 2006. According to the FHFA housing value index, U.S. home prices are at about the same level as they were in March 2005. Price declines have varied widely by region, with the Pacific states being hit the hardest, followed by the Mountain and South Atlantic regions.

Overall, prices increased in five of the nine U.S. Census regions in July, with declines limited to the Central and New England states. The largest monthly gains were in the hard-hit Pacific region, where prices were up 1.6 percent on a seasonally adjusted basis.

For the year, prices are down 9.0 percent in the Pacific region, following an 18.7 percent decline the year before. The Mountain region posted the biggest annual decline, down 9.0 percent for the year after a 6.0 decline from July 2007-2008. The South Atlantic region, which has been heavily impacted by steep price declines in Florida, was down 5.6 percent over the previous 12 months after a 6.1 percent decline the year before.

West South Central avoided downward trend

Of the nine Census regions, only the West South Central has posted annual gains over the last two years, increasing 0.1 percent over the past 12 months after a 1.0 percent rise from July 2007-2008. The region covers Oklahoma, Texas, Louisiana and Arkansas.

Comparisons between individual Census districts can be difficult due to the broad variety of their makeup. With relatively few states, the West South Central region is disproportionately influenced by Texas, where prices have remained relatively stable despite severe price declines in other parts of the country. The South Atlantic region, on the other hand, covers the entire Eastern Seaboard from Delaware on south, moderating the influence of Florida, which has seen some of the nation's steepest price declines.

The Mountain region is heavily affected by containing Arizona and Nevada which, along with Florida and California, have been among the four states posting the biggest housing price declines and foreclosure rates.

The FHFA housing price index is released monthly.