Freddie Mac Home Price Index Declines 0.4% In Q4 Despite All-Time Low Mortgage Rates And Homebuyer Tax Credit

Tyler Durden's picture

The latest from Government Sponsored Zombie #1: Freddie's Home Price Index declined by 0.4% year over year. Even the government, with all its subsidy bells and whistles, can merely drag the horse to the water, so to say. Sure enough, there is "spin out of the box" ready for this as well (read below to find out all about the shiny package this turd came delivered in). In the meantime, after going above 5% just once in the past 5 weeks, last week the Freddie 30 year Fixed Rate popped by 12 bps: the greatest weekly increase so far in 2010.

From the press release:

McLean, VA – Freddie Mac (NYSE: FRE) announced today that its
Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series
registered a 0.4 percent decline from the fourth quarter of 2008 to the
fourth quarter of 2009, a much smaller decline than the 9.5 percent
drop in home prices recorded in 2008. In the final quarter of 2009, the
U.S. Index was down 1.4 percent (-5.4 percent annualized) relative to
the third quarter, on a not-seasonally adjusted basis.

"Mortgage rates on 30-year fixed-rate loans hit an all-time low in
Freddie Mac's Primary Mortgage Market Survey® in December and averaged
4.9 percent over the fourth quarter. Low rates coupled with the
first-time homebuyer tax credit helped boost home sales to their
highest level in two-and-a-half years, seasonally adjusted,” said Frank
Nothaft, Freddie Mac vice president and chief economist. "We normally
see a seasonal effect in the fourth quarter price index that reduces
its value. A year-over-year comparison largely controls for this. Over
2009, the national index dipped slightly – -0.4 percent – and
four-of-nine regions posted price gains, with the Pacific region
showing a third consecutive quarterly gain as well as an annual
increase in prices.”

The CMHPI Purchase-Only Series excludes all refinancings in its
calculation. Freddie Mac also produces a CMHPI Classic Series that
includes data from both home purchase transactions and mortgage
refinancings, with the latter values based on appraisals. Generally,
because appraisals are backwards looking through the use of recent
comparable property transactions, the Classic Series will typically lag
changes in the Purchase-Only series. The CMHPI Classic Series indicated
that average U.S. home values fell 0.7 percent (-2.8 percent
annualized) during the fourth quarter and depreciated 4.3 percent over
2009.

The CMHPI Purchase-Only Series had the following regional house-price changes:

Pacific Division (AK, CA, HI, OR, WA): rose 0.5
percent (1.8 percent, annualized) in the fourth quarter of 2009. Over
the last 12 months, home values increased 1.6 percent, and during the
last five years, home values have decreased 8.0 percent.
East South Central Division (AL, KY, MS, TN): decreased
0.1 percent (-0.4 percent, annualized) in the fourth quarter of 2009.
Over the last 12 months, home values increased 0.8 percent, and during
the last five years, home values increased 14.4 percent.
Middle Atlantic Division (NJ, NY, PA):
decreased 0.1 percent (-0.4 percent, annualized) in the fourth quarter
of 2009. Over the last 12 months, home values decreased 0.1 percent,
and during the last five years, home values increased 12.4 percent.
West South Central Division (AR, LA, OK, TX):
fell 0.2 percent (-1.0 percent, annualized) in the fourth quarter of
2009. Over the last 12 months, home values were increased 1.5 percent,
and during the last five years, home values increased 19.3 percent.
West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased
0.7 percent (-2.8, annualized) in the fourth quarter of 2009. Over the
last 12 months, home values rose 1.1 percent; over the last five years,
home values increased 3.8 percent.
New England Division (CT, MA, ME, NH, RI, VT):
declined 0.7 percent (-2.7 percent, annualized) in the fourth quarter
of 2009. Over the last 12 months, home values decreased 0.1 percent,
and during the last five years, home values declined 3.6 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY):
decreased 2.8 percent (-10.9 percent, annualized) in the fourth quarter
of 2009. In the last 12 months, home values decreased 7.0 percent;
during the last five years, home values increased 2.6 percent.
East North Central Division (IL, IN, MI, OH, WI): decreased
3.2 percent (-12.1 percent, annualized) in the fourth quarter of 2009.
Over the last 12 months, home values decreased 0.9 percent, and during
the last five years, home values decreased 6.0 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV):
fell 3.2 percent (-12.1 percent, annualized) in the fourth quarter of
2009. Over the last 12 months, home values decreased 1.8 percent, and
during the last five years, home values increased 1.0 percent.

Unlike other home price indexes based on mean or median values of
homes sold during a given period, the Conventional Mortgage Home Price
Index is constructed, using regression techniques, from observations of
actual sales prices or appraised values of the same homes over time.
The street addresses of properties that serve as collateral for
mortgages funded by the two secondary mortgage market firms are
processed using software certified by the United States Postal Service
to create a uniform address format and are then matched to identify
consecutive transactions on the same property. There are currently 41
million records in the repeat-transactions database used to construct
the classic Conventional Mortgage Home Price Index – this database
includes transactions on one-unit detached and single-family townhome
properties serving as collateral on loans originated through the fourth
quarter of 2009 and purchased by Freddie Mac or Fannie Mae by January
31, 2009.

Freddie Mac publishes the Conventional Mortgage Home Price Index
each quarter. Index values and growth rates for the nation as a whole
as well as for the nine Census divisions, the 50 states and the
District of Columbia, and 392 metropolitan statistical areas (MSAs) and
metropolitan divisions under the classic series of the CMHPI are
available and the purchase-transaction only series is available for the
nation and nine Census divisions. All of the CMHPI series can be found
on Freddie Mac’s web site, www.freddiemac.com/finance/cmhpi/.