March 13, 2012 (Jeff Alan)
The national average home price fell 0.9 percent to $195,000 for transactions completed in January according to the latest Lender Processing Services (LPS) Home Price Index (HPI), leaving home prices at a level last seen in March of 2003.
It was the second consecutive decline in monthly home prices and follows a revised 0.4 percent decline in December. The average home price was 3.2 percent below January 2011’s prices and 26.4 percent below the market peak in June 2006.
Early, partial data from February’s sales suggest that the decline in home prices will continue with a likely price decline of approximately 0.3 percent expected for the month. The decline in home prices continues a seasonal fall/winter pattern that has been experienced by the housing market since 2009.
The LPS HPI was updated this month to include the impact of short sale and foreclosure price data on estimates of normal market prices and expanded geographic coverage with the inclusion of FHFA’s HPI data, increasing the number of Metropolitan Statistical Areas (MSAs) it tracks from 436 to approximately 585.
Previous data showed that the most rapid decline in home prices occurred between July 31, 2007, and January, 2009, with an annual rate of decline of 13.8 percent. However, new data suggests that the most rapid decline occurred from June 2007 through January 2008 at an annual rate of decline of 10.9 percent followed by a slower period of decline between January 2009 and May 2010, in which the annual rate of decline was 1.8 percent. The slower rate of decline was likely a result of the effects brought on by the home buyer tax credit programs which were introduced during that time period. Since that time, the fall in home prices has accelerated to an annual rate of decline of 5.2 percent.
Twenty-four of the 26 largest MSAs in the Index posted a monthly decline in average prices with the largest losses posted in Chicago (-2.1%), Cleveland (-1.9%) and San Francisco (-1.6%). Washington D.C. (+0.1%) was the only MSA to post an increase from December to January, while prices in Cincinnati remained unchanged.
Year-over-year, only four of the 26 largest MSAs posted an increase in average home prices with the largest gains posted in Pittsburgh (+3.1%) and Cincinnati (+1.2%) while the largest losses occurred in Atlanta (-10.6%), St. Louis (-8.3%) and Chicago (-7.8%).
Average home prices in three MSA’s, Detroit, Atlanta, and Cleveland are currently 30.3, 11.8, and 8.5 percent below January 2000 levels, respectively.
Tags: average home price, home price index, market peak, MSAs, rapid price decline