Wednesday, April 25, 2012

FHFA: Mountain states home prices turn positive in February

House prices in February in the Mountain region, which includes Colorado, were up, year over year, for the first time in 53 months. During February, the FHFA home price index for the mountain state region increased 1.7 percent over February 2011.  Nationally, the house price index rose slightly for the first time since July 2007, rising 0.4 percent. The new house price index numbers, released today by the Federal Housing and Finance Agency, also showed that the national index is down 20.3 percent from the peak level reached in June 2007, while the Mountain region's index is down 30.7 percent over the same period.

The FHFA monthly index is calculated using purchase prices of houses purchased with loans that have been sold to or guaranteed by Fannie Mae or Freddie Mac. It is a repeat-sales index similar to the Case-Shiller index, but limited to GSE loans.

Although it has shown more negative growth than other indices in recent years, the increase in FHFA monthly house prices in the region generally reflects overall trends also found in other home price indices such as the CoreLogic index and the Case-Shiller index. According to FHFA, prices have largely stabilized over the past several months, but remain slightly down from 2009 and 2010 levels. Home prices have shown year-over-year increases since January 2012 in both the Case-Shiller and the CoreLogic indices. The first chart shows the index values for the U.S. and the Mountain region.  

The second chart shows each month's house price index compared to the same month a year earlier:

February 2012 was the end of a period of negative year-over-year comparisons in home prices that lasted 52 months in a row.  We can note that until February (in the latest revisions), the Mountain region had tended to perform more poorly (from a seller's perspective) than the national index. This runs contrary to some local experience and some statistics. The Case-Shiller data for the Denver metro area, for example, shows that local prices did not decline as much as the national composite index following the financial crisis in 2008. Also, the FHFA "expanded-data" index shows Colorado performing better than the national index. Yet during February, the monthly FHFA index shows that mountain region with a larger increase in the price index than the nation overall.

Since we're looking at regional data, however, we have to keep in mind that this data reflects house prices in Arizona and Nevada, and this no doubt will continue to put downward pressure on regional prices for now.

Overall, this report signals that home prices began to turn positive in the region during early 2012. This reflects trends reported for Colorado and metro Denver in other home price indices as well.