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Economy in Brief

FHFA Home Price Index Improves Slightly M/M But Greatly Y/Y
by Tom Moeller December 22, 2009

Improvement in housing prices continued this fall according the U.S. House Price Index from the Federal Housing and Finance Agency (FHFA). The Purchase Only Index for October rose 0.6% and reversed its September. Nevertheless, the year-to-year decline in the nationwide average of home prices eased to -1.9% from its worst reading of -8.8% last November. Since their peak in early-2007 home prices nationwide have fallen 10.7%. The FHFA uses data provided by Fannie Mae and Freddie Mac and is not value-weighted.

The HPI is calculated using a repeat sales index. That means that the HPI measures changes in the price of the same property over time but does not measure changes in property types over time. So if, for example, the price of a larger, new home was not growing very rapidly, but the number of people transitioning from smaller homes to larger homes greatly increased, median house prices would go up (people buying more expensive houses) much more than the HPI. In this way, the HPI is a better measure of how any particular home is appreciating while the median house price is a better measure of what the typical home buyer is paying.

Notable monthly gains in home prices during October were logged in the Pacific, Middle Atlantic and the East South Central regions of the country and the y/y declines have moderated significantly. In the populous East North Central region prices slipped another 0.6% during October and they were flat year-to-date. Prices also fell sharply in the South Atlantic region to the lowest level since 2004.

FHFA U.S. House Price Index Purchase Only (%) October September Y/Y 2008 2007 2006
Total 0.6 -0.4 -1.9 -5.8 1.3 6.0
  New England 0.0 0.3 -1.8 -4.6 -1.7 1.1
  Middle Atlantic 1.8 -1.5 -1.6 -2.3 1.9 6.3
  East North Central -0.6 -0.7 -1.9 -4.4 -1.3 1.8
  West North Central 0.2 0.0 -0.7 -2.8 1.0 3.2
  South Atlantic -1.1 0.2 -4.1 -7.2 1.3 7.1
  East South Central 1.6 -1.5 -0.4 -1.4 3.8 7.2
  West South Central 0.5 -0.3 0.0 0.6 4.7 7.2
  Mountain 0.8 -1.4 -7.5 -6.1 3.9 10.6
  Pacific 3.7 -0.9 -0.3 -17.3 0.1 9.8
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