U.S. home prices experienced a quarterly decline for the first time since 1994, the Office of Federal Housing Enterprise Oversight says.
The OFHEO House Price Index, which is based on data from sales and refinance transactions, was 0.4% lower in the third quarter than in the second quarter of 2007. This decline is similar to that of 0.3% (seasonally adjusted) shown in the purchase-only index that is based solely on purchase purchase price data. The annual price change, comparing the third quarter of 2007 to the same period last year showed an increase of 1.8%, is the lowest four-quarter increase since 1995.
‘While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country’ says James B. Lockhart, OFHEO's director. ‘Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.’
According to the OFHEO, many of the cities and states experiencing the sharpest declines this quarter were the same cities and states experiencing the sharpest increases just a couple of years ago, suggesting some price corrections in those markets.
‘Rising inventories of for-sale properties are clearly having a material impact on home prices,’ notes Patrick Lawler, OFHEO's chief economist. ‘Until those inventories shrink, that will be a great source of resistance to price increases.’