May’s home-price fall is fastest yet
Posted on Wednesday, July 23, 2008
URL: http://www.nwanews.com/adg/Business/232132/
U. S. home prices fell at the fastest pace of the year in May, compared with the same month in 2007, suggesting no end to the three-year housing slump. Prices dropped 4. 8 percent, faster than the 4. 6 percent yearover-year decline in April, the Office of Federal Housing Enterprise Oversight said in a report Tuesday. The one-month decline, from April, was 0. 3 percent, Washington-based agency said.
Eight out of nine regions showed declines as the worst housing slump in more than a quarter of a century deepened with banks cutting lending after $ 400 billion in mortgage-related losses and write-downs. Treasury Secretary Henry Paulson last week asked Congress to approve legislation allowing the government to extend credit to Fannie Mae and Freddie Mac and buy their stocks if needed to stem further declines in housing.
The only region to see a price gain was the West South Central with an increase of 0. 5 percent. It includes Arkansas, Oklahoma, Texas and Louisiana.
Figures from the federal agency for individual states were not available.
However, a report in May by the Arkansas Realtors Association stated that the average home price in the state was down 2 percent compared with the corresponding month in 2007.
Arkansas’ homes have been able to avoid a steep drop in price, according to Jim Furr, president of the Arkansas Realtors Association.
Since January 2007, prices have averaged a 1. 33 percent increase each month, according to Arkansas Democrat-Gazette archives. In that period, there have only been four months when prices slipped.
“I think a lot of that has to do with the fact most areas of Arkansas over the past several years did not see a rapid increase in prices,” Furr said.
The areas of the country whose house markets underwent an inflated trend are now are seeing a major downward adjustment.
Roddy McCaskill, an executive broker at Keller-Williams in Little Rock, said the average sales price has gone from $ ®, 300 to $ 171, 600 in Pulaski County through the first six months of 2008 compared with the corresponding period of 2007. “That’s 98 percent, so we may have had a 2 percent drop this year to last year but that’s statistically insignificant when you consider the different variables that go into [the market ],” he said.
A new law including provisions for stricter regulation of the government-sponsored enterprises “may have a positive impact on future house price performance,” Office of Federal Housing Enterprise Oversight Director James Lockhart said in a prepared statement.
Prices fell the most from a year ago in California, Washington, Oregon, Alaska and Hawaii, which collectively recorded a 14. 5 percent drop. Florida, Georgia, the Carolinas and states in the South Atlantic region fell 5. 8 percent, the agency said. In New York, New Jersey and Pennsylvania the decline was 2. 1 percent.
The monthly house price index is down 4. 9 percent from its peak in April 2007, said the agency, which is the regulator of Fannie Mae and Freddie Mac. Fannie Mae, the nickname for the Federal National Mortgage Association, is the governmentformed corporation established in 1938 to purchase governmentbacked and conventional mortgages from lenders and securitize them.
Freddie Mac is the nickname for the Federal Home Loan Mortgage Corp., created by Congress in 1970. It also purchases mortgages, pools them and sells them as securities to investors, like Fannie Mae. Both are government-sponsored enterprises and are stockholder-owned companies.
California had the most foreclosure filings in June for the 18 th consecutive month, increasing 77 percent in June from a year earlier to 68, 666, according to data from Irvine-based Realty-Trac Inc.
Sales of previously owned homes probably will drop to 5. 39 million in the U. S. this year, 24 percent below the 2005 alltime annual high of 7. 08 million, the National Association of Realtors said in a July 8 forecast. Measured monthly, home sales reached a peak in September 2005, at an annualized pace of 7. 25 million.
The median U. S. home price probably will tumble 6. 2 percent in 2008 to $ 205, 300, the Realtors group said in its forecast. Last year’s 1. 4 percent drop was the first national decline in the U. S. median since the Great Depression, according to Lawrence Yun, chief economist of the housing group.
As for Arkansas, Furr of the Realtors association said Arkansas might be avoiding the bad, but that is only because it didn’t see the good. “The actual value of the properties themselves are not seeing much of a fluctuation anywhere in the state,” he said. “[But ], we were not going up 15 [percent ], 18 percent [annually ] for the last five or six years.” Information for this article was provided by Sean Sposito of the Arkansas Democrat-Gazette.