McLean, VA – Freddie Mac (NYSE: FRE) announced today that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 10.4 percent drop in U.S. home values during the first quarter of 2008 on an annualized basis, following a downward revised 9.9 percent annualized drop in the fourth quarter. Over the four quarters ending with the first quarter of 2008, home sales prices fell an average of 4.4 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series.

The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series, which includes data from both home purchase transactions and mortgage refinancings, with the latter home values based on appraisals. The CMHPI Classic Series indicated that home values fell 2.4 percent nationally during the first quarter on an annualized basis, the steepest quarterly decline since 1971. Over the year ending with the first quarter, home values depreciated 0.8 percent on average in the Classic Series, the first annual drop in this index over the 39 years spanned by the series.

"Particularly striking has been the depth and breadth of home-value decline across the U.S." said Frank Nothaft, Freddie Mac vice president and chief economist. "In the past we have seen regions that were still appreciating while the national average had registered a decline. In the CMHPI Purchase-Only Series we saw all nine regions of the country experience price declines at the same time, though to different degrees: During the first quarter, house prices dipped an average of 0.5 percent in the West South Central states but fell an average of 6.9 percent for states in the Pacific division.

“While we expect to see further declines in average home values throughout this year and into 2009, we will be watching very carefully for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales, now that the traditional home-buying season spanning late spring and early summer is underway.”

Forty-six states registered price declines in the first quarter and 29 states had declines measured from the same time a year ago, according to the CMHPI Purchase-Only Series. Montana, North Dakota, South Carolina and Wyoming had modest price gains during the first quarter. In general, states in which the local economy remained more vibrant tended to have better home-value performance than other states.

Based on annualized quarterly growth rates in the CMHPI Purchase-only Series, the West South Central states showed the smallest decline in home sales prices over the first quarter at a -1.9 percent rate. The Middle Atlantic states experienced the second smallest drop in home prices of -4.1 percent, followed by the East South Central states which posted a -4.3 percent change. Two divisions tied for the median change in home values at -5.9 percent: East North Central and Mountain. The West North Central division recorded a change of -8.6 percent in home prices and three regions showed double digit declines: South Atlantic at -10.1 percent, New England at -11.0 percent and Pacific at -24.8 percent.

The Conventional Mortgage Home Price Index Classic Series shows the following regional performances:

West South Central Division (AR, LA, OK, TX): decreased 0.5 percent (-1.9 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values increased 1.6 percent, and during the last five years, home values increased 26.8 percent.
Middle Atlantic Division (NJ, NY, PA): decreased 1.1 percent (-4.1 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 0.2 percent, and during the last five years, home values increased 44.3 percent.
East South Central Division (AL, KY, MS, TN): decreased 1.1 percent (-4.3 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values increased 0.3 percent, and during the last five years, home values increased 26.6 percent.
East North Central Division (IL, IN, MI, OH, WI): decreased 1.5 percent (-5.9 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 3.8 percent, and during the last five years, home values increased 9.2 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): decreased 1.5 percent (-5.9 percent, annualized) in the first quarter of 2008. In the last 12 months, home values decreased 3.3 percent; during the last five years, home values increased 44.0 percent.
West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 2.2 percent (-8.6 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 2.3 percent; over the last five years, home values increased 16.3 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): decreased 2.6 percent (-10.1 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 4.4 percent, and during the last five years, home values increased 37.8 percent.
New England Division (CT, MA, ME, NH, RI, VT): decreased 2.9 percent (-11.0 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 4.0 percent, and during the last five years, home values increased 22.2 percent.
Pacific Division (AK, CA, HI, OR, WA): decreased 6.9 percent (-24.8 percent, annualized) in the first quarter of 2008. Over the last 12 months, home values decreased 12.4 percent, and during the last five years, home values have increased 40.1 percent.

Jointly developed by Freddie Mac and Fannie Mae and first published by Freddie Mac starting in 1994, the Conventional Mortgage Home Price Index features indexes for the nine Census divisions as well as a national index. The national index is the average of the nine divisional indexes weighted by the distribution of one-unit detached, single-family structures in each Census division.

Unlike other home price indexes based on mean or median values of homes sold during a given period, the Conventional Mortgage Home Price Index is constructed, using regression techniques, from observations of actual sales prices or appraised values of the same homes over time. The street addresses of properties that serve as collateral for mortgages funded by the two secondary mortgage market firms are first processed using software certified by the United States Postal Service to create a uniform address format and are then matched to identify consecutive transactions on the same property. There are currently more than 34 million records in the repeat-transactions database used to construct the classic Conventional Mortgage Home Price Index - this database includes transactions on one-unit detached and single-family townhome properties serving as collateral on loans originated through the first quarter of 2008 and purchased by Freddie Mac and Fannie Mae by April 30, 2008.

Freddie Mac publishes the Conventional Mortgage Home Price Index each quarter. Index values and growth rates for the nation as a whole as well as for the nine Census divisions, the 50 states and the District of Columbia, and 392 metropolitan statistical areas (MSAs) and metropolitan divisions under the classic series of the CMHPI are available and the purchase-transaction only series is available for the nation and nine Census divisions. All of the CMHPI series can be found on Freddie Mac's web site, www.freddiemac.com/finance/cmhpi/.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.

Freddie Mac's Primary Mortgage Market Survey® (PMMS®) which was released today showed that  the 30-year fixed-rate mortgage (FRM) averaged 6.08 percent for the week ending May 29, 2008, up from last week when it averaged 5.98 percent. A year ago at this time,  the 30-year FRM averaged 6.42 percent.

The 15-year FRM this week averaged 5.66 percent, up from last week's average of 5.55 percent. Same time last year, the 15-year FRM averaged 6.12 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.62 percent this week, up very slightly from last week's average of 5.61 percent. Last year, the 5-year ARM averaged 6.19 percent.

One-year Treasury-indexed ARMs averaged 5.22 percent this week, down slightly from last week's average of 5.24 percent. At this time last year, the 1-year ARM averaged 5.57 percent.

"Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term rates later this year," said Frank Nothaft, Freddie Mac vice president and chief economist. "A recent working paper published by the Federal Reserve Bank of Minneapolis suggested that the recent rate cuts run a risk of unhinging long-term market expectations for inflation. Indeed, market inflation expectations increased over the last few weeks and the federal funds futures market now has a 25 basis point rate hike priced in by the end of the year.

"While existing house prices continue to decline, new home sales unexpectedly rose in April and the number of month’s supply of new homes for sale fell from 11.1 months in March to 10.6 months in April. Moreover, the median sales price for new homes rose 1.5 percent in April from the same month in 2007, representing the first yearly increase since November 2007."

source, FreddieMac's Weekly Primary Mortgage Market Survey® (PMMS®)  

Sales of new homes increase unexpectedly in April. The increase was the first time in six months but still sales activity nears the lowest level in 17 years.

The Commerce Department reported Tuesday that sales of new homes increased 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units.

The Commerce report’s median price of a new home sold in April increase to $246,100 in April, up 1.5 percent from a year ago. However, analysts were not impressed as the price gain is small price and prices tend to be unstable.

The Commerce report on new home sales showed the April rebound was led by a huge 41.7 percent surge in sales in the Northeast. Sales were up 8.3 percent in the West and 5.8 percent in the Midwest. The only region which saw a decline in sales in April was the South, where sales fell by 2.4 percent.

The inventory of unsold new homes slipped a little to 10.6 months’ supply in April, against March inventory of 11.1. However, the April level was still about double the inventory level that was normal during the housing boom.

That housing boom ended in 2005 and since that time the housing industry has been under pressure with falling sales and prices accompanied by increasing mortgage defaults.

Economists forecast that home prices will remain under pressure until the level of inventories has reached a more manageable level. Many analysts don’t expect to see a reversal of price trends until next year.

U.S. home prices fell percent during the first quarter. It is the sharpest drop in two decades which points to a much longer and worsening housing slump.

Standard & Poor’s/Case-Shiller National Home Price Index reading dropped 14.1 percent in the first quarter compared to the same period last year. This is the lowest since it started the quarterly index in 1988. The index is a broader composite of single-family home price indices for the nine U.S. Census divisions and is calculated quarterly.

Prices nationwide are at levels not seen since the third quarter of 2004, according to Maureen Maitland, an S&P vice president. However, the index is still up 60 percent against 2000.

“There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path,” said David Blitzer, chairman of S&P’s index committee.

Nineteen of the 20 metro areas showed annual declines, with 15 of them marked record lows. Price drops in six metro areas were more than 20 percent.

Las Vegas had the worst performance in March, falling 25.9 percent from a year earlier, followed by Miami and Phoenix. Only Charlotte, North Carolina, increase by less than 1 percent over the previous year.

Last week, the Office of Federal Housing Enterprise Oversight reported a home prices drop of 3.1 percent in the first quarter, the largest drop in its 17-year history and only the second quarter of price declines recorded.
 
 

Home prices posted a sharpest decline in its 17 year history. The Office of Federal Housing Enterprise Oversight (OFHEO) said Thursday that home prices fell 3.1 percent in the first quarter compared with last year.

The home-price index is considered to be the most comprehensive reading of the U.S. market. Falling home prices were greatly experienced in California, Florida and Nevada.

This is the second quarter that a price decline was experience on a year-over-year basis when the first one was in the final quarter of 2007, when it dropped 0.45 percent.

Prices fell in 43 states, with California and Nevada exhibiting the sharpest drops. Home prices declines where more than 8 percent in the said states.

The government index also fell 1.7 percent from the fourth quarter of 2007 to the first quarter of 2008, the largest quarterly price drop on record.

“The large overhang of real estate inventory awaiting sale continues to force price declines in many areas, but particularly in places that had seen very sharp appreciation,” Patrick Lawler, the agency’s chief economist, said in a prepared statement.