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Economy in Brief

U.S. Home Prices On The Rise; Distressed Sales Matter
by Tom Moeller November 2, 2009

Without question, the sales price of most homes is under pressure. Demand is down and supply is up. Nevertheless, home prices recently have turned around after a decline that began early in 2006. On a month-to-month basis home prices have risen for the last five months, as measured by First American CoreLogic. Moreover, the y/y decline is half that logged early this year. Nevertheless, prices still are down 10.1% from August of 2008 and they have fallen 28.1% from the peak during the spring of 2006.

Until 2006, measuring the degree to which prices were affected by distressed sales hadn't been much of an issue. Recently, however, it has become relevant in providing perspective on home price performance. When distressed sales are stripped out prices also are down y/y, but the depth of the decline is less dramatic than the total. These prices have risen for just the last four months, but the y/y change of -6.3% is notably moderate. Since the peak these prices have fallen 20.8%.

The Loan Performance House Price Index (HPI) is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time. This approach provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The data are developed by First American CoreLogic and are available from Haver's USECON database. Seasonal adjustment of the data is done by Haver Analytics. 

Residential and commercial real estate is the title of this morning's testimony by Jon D. Greenlee, Associate Director, Division of Banking Supervision and Regulation and it can be found here here.

House Price (SA) August July 2008 2007 2006
Total (year-to-year) -10.1 -11.7 -14.6 -4.4 -7.1
   month-to-month 0.7 1.5      
Distress Sales Excluded (y/y) -6.3 -6.9 -10.9 -3.0 -6.8
   month-to-month 0.1 0.7      

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