Home/Mortgages/Home Prices Fall for Sixth Consecutive Month, Decline Accelerating

March 13, 2012 (Jeff Alan)

The national average home price fell 1.0 percent to $197,000 for transactions completed in December according to the latest Lender Processing Services (LPS) Home Price Index (HPI), and early data for January suggests the decline in prices may be accelerating.

It was the sixth consecutive month that home prices fell from the previous month and follows a 0.6 percent decline in November. The decline in home prices continues a seasonal fall/winter pattern that has been experienced by the housing market since 2009. The average home price was 3.9 percent below December 2010’s prices and leaves prices at a level not seen since September 2002.

Early, partial data from January’s sales suggest that the decline of home prices may be accelerating as a likely price decline of approximately 1.2 percent will be posted for the month.

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 $29,000 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 December, 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 Detroit (-2.9%), Chicago (-2.3%) and Atlanta (-1.9%). Phoenix (+0.9%), and Miami (+0.2%) were the only MSAs to post an increase from November to December, while prices in Tampa remained unchanged.

For the entire year of 2011, only 5 of the 26 largest MSAs 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 occurred in Atlanta (-22.2%), Chicago (-8.2%), San Francisco (-7.2%) and Seattle (-7.2%).

Average home prices in five MSA’s, Detroit, Atlanta, Cleveland, Phoenix and Chicago are currently 50.5, 30.5, 12.2, 5.1 and 3.8 percent below January 2000 levels, respectively.

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