November 21, 2011 (Jeff Alan)

Home prices have declined 28.3 percent since the market peak in June 2006 according to Lender Processing Services (LPS) Home Price Index (HPI) for August with Pittsburgh being the only area that has seen its average home price rise since that time.

The LPS HPI summarizes national home prices by tracking monthly prices in over 13,500 ZIP codes covering 404 Metropolitan Statistical Areas (MSAs).

“Unlike many other indices, the LPS HPI tracks home prices at the date of sale on a month-by-month basis,” explained Kyle Lundstedt, managing director for LPS Applied Analytics. “Our methodology allows us to detect market changes sooner than others and to provide the financial industry with the most accurately timed price information.

During the market peak in 2006, the average price for a house in Pittsburgh was $163,000, but by the end of August the average price had climbed to $195,000, a 19.6 percent increase.

The MSA that has posted the largest decline in home prices since the market peak is Phoenix, which has seen prices fall 57.1 percent since June 2006.

Monthly home prices fell 0.9 percent across the nation in August and follow a 0.4 percent decline in July. Home prices at the end of August were 3.8 percent below the previous year’s prices.

Twenty-three of the 26 largest MSAs posted a monthly decline in August with the largest declines recorded in Atlanta (-2.8%), Los Angeles (-1.4%) and Phoenix (-1.4%). None of the MSAs posted a price gain for the month while three MSAs (Detroit, Chicago, and Minneapolis) remained virtually unchanged from the previous month.

Since the beginning of the year, home prices have declined 0.4 percent with 10 of the 26 largest MSAs posting a decline since that time. The largest price increase posted since the beginning of the year has been in Detroit where prices have increased 10.8 percent while the largest decline has been in Atlanta, where prices have fallen 10.5 percent.

Average home prices peaked at $282,000 in June 2006 and stood at $205,000 at the end of August. The total value of U.S. housing inventory covered by the Index stood at $10.6 trillion at the market peak and was valued at $7.65 trillion at the end of August.

The most rapid decline in home prices occurred 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 3.6 percent, with home prices declining a total of $20,000.

Average home prices in four MSA’s, Detroit, Atlanta, Phoenix and Cleveland, are currently 41.6, 20.4, 8.0 and 7.4 percent below January 2000 levels, respectively.

Early, partial data for September’s sales indicates that a likely home price decline of approximately 1.1 percent will be posted for the month.

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