Home Prices Fall for Third Month with Flat Growth Expected Through 2013

December 7, 2011 (Chris Moore)

Weak housing demand took its toll on housing prices in October as monthly national home prices fell for the third consecutive month, declining 1.3 percent in October according to CoreLogic’s October Home Price Index (HPI). The Index expects flat growth due to supply and demand imbalances through 2013.

Home prices in October were 3.9 percent lower than in October of last year and it was the first monthly increase in year-over-year prices since April. This follows a revised decline in annual home prices of 3.8 percent in September which had been part of a six month streak in which year-over-year home prices declined in each in successive month

In August, the year-over-year price difference was -4.4 percent, in July it was -4.8 percent, in June it was -6.0 percent, in May it was -7.4 percent and in April the annual price difference was -7.5 percent.

Distressed property sales continue to have a significant impact on housing prices as the difference in year-over-year prices in October would have only been 0.5 percent lower if distressed property sales were excluded.

Since the market peak in April 2006, home prices have declined 32.0 percent when including distressed property sales and when excluding distressed property sales, home prices have dropped 22.4 percent since the market peak.

CoreLogic defines distressed property sales as short sales and real estate owned (REO) transactions.

“Home prices continue to decline in response to the weak demand for housing. While many housing statistics are basically moving sideways, prices continue to correct for a supply and demand imbalance. Looking forward, our forecasts indicate flat growth through 2013,” said Mark Fleming, chief economist for CoreLogic.

Seventy-eight out of the top 100 Core Based Statistical Areas (CBSAs) experienced year-over-year price declines in October, which was two less than the revised amount reported in September.

The five states with the highest year-over-year (YOY) appreciation including distressed sales were: West Virginia (+4.8 percent), South Dakota (+3.1 percent), New York (+3.0 percent), District of Columbia (+2.4 percent) and Alaska (+2.1 percent). In September, those states were: West Virginia (+7.0 percent), Wyoming (+3.8 percent), South Dakota (+3.6 percent), Maine (+3.5 percent), and North Dakota (+3.1 percent).

The five states with the greatest YOY depreciation including distressed sales were: Nevada (-12.1 percent), Illinois (-9.4 percent), Arizona (-8.1 percent), Minnesota (-7.9 percent) and Georgia (-7.3 percent). In September, those states were Nevada (-12.4 percent), Illinois (-9.2 percent), Arizona (-9.0 percent), Minnesota (-8.3 percent), and Georgia (-7.2 percent).

The five states with the highest YOY appreciation excluding distressed sales were: South Carolina (+4.6 percent), Maine (+3.1 percent), New York (+3.1 percent), Alaska (+2.9 percent) and Kansas (+2.8 percent). In September, those states were: West Virginia (+13.2 percent), Maine (+5.8 percent), Wyoming (+4.8 percent), Montana (+4.4 percent), and Kansas (+3.9 percent).

The five states with the greatest YOY depreciation excluding distressed sales were: Nevada (-8.8 percent), Arizona (-7.0 percent), Minnesota (-5.7 percent), Delaware (-3.9 percent) and Georgia (-3.6 percent). In September, those states were: Nevada (-9.6 percent), Arizona (-7.7 percent), Minnesota (-5.9 percent), Michigan (-4.8 percent), and Delaware (-3.7 percent).

Tags: CoreLogic, home prices, distressed property sales, appreciation, depreciation, flat growth

Sources:
CoreLogic