House Prices Increase Slightly in Third Quarter

First quarterly increase since the second quarter of 2007

FHFA News Release
November 24, 2009
HousingZone

Washington, DC — U.S. house prices rose modestly in the third quarter of 2009 according to
the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house
price index (HPI). The HPI, calculated using home sales price information from Fannie Maeand
Freddie Mac-acquired mortgages, was 0.2 percent higher on a seasonally adjusted basis
in the third quarter than in the second quarter of 2009. Over the past year, seasonally adjusted
prices fell 3.8 percent from the third quarter of 2008 to the third quarter of 2009. The
quarterly report analyzing housing price appreciation trends was released today by FHFA
Acting Director Edward J. DeMarco. 

FHFA’s seasonally adjusted monthly index for September was unchanged from August. The
monthly change for the July-to-August period was revised to -0.5 percent, from an initial
estimate of -0.3 percent. 

“These data provide some evidence of short-term stabilization in housing prices, a likely result
of the many ongoing efforts to stabilize markets,” said DeMarco. “Given the headwinds facing
markets, including high unemployment rates and continued high levels of delinquency and
foreclosures, the longer-term view remains uncertain.” 

While the national, purchase-only house price index fell 3.8 percent from the third quarter of
2008 to the third quarter of 2009, prices of other goods and services fell 2.8 percent.
Accordingly, the inflation-adjusted price of houses fell approximately 1.0 percent over the latest
year. 

Unlike the FHFA purchase-only index, FHFA’s all-transactions house price index, which
includes data from mortgages used for both home purchases and refinancings, fell over the
latest quarter. The index declined 2.4 percent in the latest quarter and 4.1 percent over the
four-quarter period.
 
Significant Findings: 

• Of the nine Census Divisions, the Mountain and Pacific Divisions, both in the
  western U.S., experienced the most significant price movements in the latest
  quarter. Prices fell 1.4 percent in the Mountain Division, while prices increased 1.9
  percent in the Pacific Division.
• Seasonally adjusted, purchase-only indexes indicate that prices rose in the latest
  quarter in 19 states and Washington, D.C. Prices rose over the latest four quarters
  in only seven states. 
• The purchase-only index for California rose 2.1 percent between the second and
  third quarters of this year. 
• Of the purchase-only indexes for the 25 most-populated metropolitan areas in the
  U.S., four-quarter price declines were greatest in the Phoenix-Mesa-Scottsdale, AZ
  Metropolitan Statistical Area. In that area prices declined 22.0 percent between the
  third quarters of 2008 and 2009. Prices held up best in the Denver-Aurora-
  Broomfield, CO Metropolitan Area, where prices rose 3.3 percent over that period.

View a copy of the FHFA 3rd Quarter 2009 Report, which includes tables, historic data and house appreciation by State: Click here

This HPI report contains tables showing: 1) House price appreciation for the 50 states and
Washington, D.C.; 2) House price appreciation by Census Division and for the U.S. as a whole;
3) A ranking of 297 MSAs and Metropolitan Divisions by house price appreciation; and 4) A list
of one-year and five-year house price appreciation rates for MSAs not ranked.

Highlights
This quarter’s Highlights article provides updated estimates of the impact of distressed sales on
repeat-transactions house price indexes for the state of California. Following up on the analysis
released with the second quarter HPI, the analysis reports a relatively modest effect of REO and
short sales on the FHFA HPI in that state. 

Background
FHFA’s purchase-only and all-transactions HPI track average house price changes in repeat
sales or refinancings of the same single-family properties. The purchase-only index is based on
more than five million repeat sales transactions while the all-transactions index includes more
than 38 million repeat transactions. Both indexes use data obtained from Fannie Mae and
Freddie Mac for mortgages originated over the past 34 years. 

FHFA analyzes the combined mortgage records of Fannie Mae and Freddie Mac, which form
the nation’s largest database of conventional, conforming mortgage transactions. The
conforming loan limit for mortgages purchased since January 2006 has been $417,000. Loan
limits for mortgages originated in the latter half of 2007 through Dec. 31, 2008 were raised to
as much as $729,750 in high-cost areas in the contiguous United States. Legislation generally
extended those limits for 2009-originated mortgages. A recently enacted Congressional
Continuing Resolution (PL111-88), further extended those limits for 2010 originations in
places where the limits were higher than those that would have been calculated under preexisting
rules.