Single-family home prices in the U.S. fell an average of 14% over the 12-month period ending June 30, according to Fiserv Inc.'s analysis of the Fiserv Case-Shiller Home Price Index (HPI) and data from the Federal Housing Finance Agency.
The Fiserv Case-Shiller HPI forecasts that average single-family home prices will fall another 11% over the next 12 months, with declines expected in about 90% of the more than 350 metro areas tracked by Fiserv. Steep home-price declines are expected to continue in markets that have been hurt most by the housing crisis, including metro areas in California, Nevada, Arizona and Florida.
"Large supplies of foreclosed properties and extremely weak job markets will continue to put downward pressure on home prices," says David Stiff, chief economist at Fiserv. "Many temporary factors that were partly responsible for strong spring and summer real estate markets, including the first-time home buyer tax credit and Federal Reserve actions to drive down mortgage interest rates, will no longer be bolstering demand. Consequently, home prices will resume falling again before they stabilize in 2010."
While falling home values in the areas mentioned are expected to drag down the national average, housing prices have shown signs of life in other markets. U.S. single-family home prices increased by 1.4% in the second quarter (on a seasonally adjusted basis) – the first gain since early 2006.
Prices increased in many markets that previously experienced dramatic price declines, including Washington, D.C.; San Francisco; and Naples, Florida. Metro areas with high volumes of foreclosure activity, such as Memphis, Tenn., and Minneapolis, also had solid price gains, as investors and homebuyers went bargain hunting, Fiserv notes.
"The second-quarter bounce in home prices is good news, since it shows that prices have dropped enough to draw buyers back into many markets – many of these first-time home buyers," adds Stiff. "The second-quarter increase in sales activity and prices indicate that confidence is returning to real estate markets, setting the stage for price stabilization and, eventually, a housing market recovery."
Nationally, home prices have fallen almost 15% over the past year, leaving the median price at $174,000. The median monthly mortgage payment in the first quarter remained steady at 14% of median family income.
One-time bubble markets in Florida, California and Arizona, which have already seen home values fall 40% to 60% since prices peaked in 2006, are showing no sign of moderation in declining prices. In Orlando, Fla., for example, average home prices declined just over 28% over the past year and are projected to fall another 27% over the next year.
In Tucson, Ariz., average home prices declined over 18% over the past year. Similarly, the San Jose,
Calif., market saw a decline of just over 24% in home values over the past year, with a projected decline of another 18% over the next year.
Fiserv also notes home-price increases in certain markets. Several markets in Texas, such as College Station, Brownsville and San Angelo, saw increases of over 3% in home-price values over the past year, while many markets in New York have also seen increases, such as Binghamton, where home values have increased nearly 18%, and Buffalo, where prices have increased over 8% in the last three years.