Home/Mortgages/Home Price Index Falls for Fifth Consecutive Month

February 21, 2012 (Jeff Alan)

The national average home price fell 0.6 percent to $199,000 for transactions completed in November according to the latest Lender Processing Services (LPS) Home Price Index (HPI), the fifth consecutive month that the average home price has fallen.

The price decline follows a 0.8 percent decline in October and continues a seasonal fall pattern that has been experienced by the housing market since 2009. The average home price was 4.8 percent below November 2010’s prices and is 3.4 percent below the average price of a home at the beginning of 2011. It was the fifth consecutive month that the Index posted a decline in home prices.

The LPS HPI summarizes national home prices by tracking monthly prices in over 13,500 ZIP codes covering 436 Metropolitan Statistical Areas (MSAs) and covers about 75 percent of the single-family properties in the U.S.

Average home prices peaked at $282,000 in June 2006 with the most rapid decline in home prices occurring between July 31, 2007, and December, 2009, when prices declined $56,000 from the market’s peak, an annual decline of 13.8 percent. Since that time, the annual rate of decline has slowed to an average of 4.4 percent, with home prices declining an additional $26,000 during that time.

The total value of U.S. housing inventory covered by the Index stood at $10.8 trillion at the market peak and was valued at $7.5 trillion at the end of November, a decline of 30.6 percent.

Twenty-three of the 26 largest MSAs in the Index posted a monthly decline in average prices with the largest losses posted in Atlanta (-2.7%), Chicago (-1.5%), Kansas City (-1.1%) and Seattle (-1.1%). Miami (+0.6%), Phoenix (+1.1%), and Tampa (+0.1%) were the only MSAs to post an increase from October to November.

Since the beginning of 2011 through the end of November, only 7 of the 26 largest MSAs have posted an increase in average home prices with the largest gains posted in Detroit (+5.8%), Pittsburgh (+2.0%) and Miami (+1.2%), while the largest losses have occurred in Atlanta (-22.8%), Seattle (-6.2%) and San Francisco (-6.0%).

Year-over-year, only three of the 26 MSAs have posted an increase in average home prices led again by Detroit with a gain of 4.4 percent. The largest decline in home prices was also in Atlanta where prices have fallen 24.4 percent in the last year.

Average home prices in five MSA’s, Detroit, Atlanta, Cleveland, Phoenix and Chicago are currently 44.4, 31.0, 10.2, 6.7 and 1.0 percent below January 2000 levels, respectively.

Early, partial data for December’s sales indicates that a likely home price decline of approximately 0.8 percent will be posted for the month.

Tags: average home price, home price index, market peak, MSAs, rapid price decline