US home prices in 20 major cities dropped at record monthly and annual pace in January, according to data released Tuesday.

The S&P Case-Shiller index of home prices covers 20 major cities where a comparison of price changes recorded when homes are resold. Prices fell 2.8 percent from December and 19 percent from last year’s reading. It was the sharpest drop since the index was established in 2000.

The 10-city index sank 19.4 percent which is also a new record. The index considered an accurate measure of market trends has been on the decline for 30 straight months. The pace of decline continues to accelerate were only a few metro areas shows slow down.

All 20 metro areas covered by the report displayed monthly and annual price declines where 14 cities suffered more than 10 percent drop while 13 areas posted new annual records.Dallas, Denver and Cleveland fared better with annual price declines of around 5 percent. Dallas with a loss of 4.9 percent, Denver and Cleveland with 5.1 percent 5.2 percent drops respectively.

Six cities, namely, Minneapolis, Charlotte, Seattle and New York, showed smaller monthly price declines in January compared with December.

Nationally, prices have dropped 29.1 percent since the index peaked during the second quarter of 2006.

Individually, Phoenix home prices have dropped 35% year-over-year, while Las Vegas home prices fell 32.5 percent, San Francisco by 32.4 percent and Miami by 29.4 percent.

Phoenix home prices has plunged 48.5 percent from its peak, the highest in all of the metro areas covered by the index. Other big losers were Las Vegas, Miami, Phoenix, San Francisco and San Diego where home prices dropped more than 40 percent from their peaks. 

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.85 percent with an average 0.7 point for the week ending March 26, 2009, down from last week when it averaged 4.98 percent. Last year at this time, the 30-year FRM averaged 5.85 percent. The 30-year FRM has not been lower in the life of Freddie Mac’s weekly survey, which dates back to 1971 for the 30-year FRM.

The 15-year FRM this week averaged 4.58 percent with an average 0.7 point, down from last week when it averaged 4.61 percent. A year ago at this time, the 15-year FRM averaged 5.34 percent. The 15-year FRM has never been lower in the life of Freddie Mac’s weekly survey, which dates back to 1991 for the 15-year FRM.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.96 percent this week, with an average 0.7 point, down from last week when it averaged 4.98 percent. A year ago, the 5-year ARM averaged 5.67 percent. The 5-year ARM has never been lower in the life of Freddie Mac’s weekly survey, which dates back to 2005 for the 5-year ARM.

One-year Treasury-indexed ARMs averaged 4.85 percent this week with an average 0.6 point, down from last week when it averaged 4.91 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“The Federal Reserve’s announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Rates for 30-Yr FRMs peaked last year at 6.63 percent on July 24th. With this week's 30-Yr FRM, the interest rate difference is almost 2 percentage points, which amounts to a savings of about $225 in monthly mortgage payments for a $200,000 loan.

“And potential homebuyers are taking notice of these historically low mortgage rates. Both new and existing home sales rose 5 percent in February. First-time homebuyers accounted for half of all existing home sales, according to the National Association of Realtors®. In addition, mortgage applications for home purchases consecutively rose over the first three weeks in March, based on figures published by the Mortgage Bankers Association.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Source: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com

 New home sales unexpectedly increase in February, bouncing back from a record low in January according to a government report released Wednesday.

The Commerce Department said that the sales of new homes increased 4.7 percent last month to a seasonally adjusted annual rate of 337,000 in February from a revised 322,000 in January. This was the first time the sales increase since July 2008.

While February sales were up from January's record low, it still 48 percent below the February 2008’s level when sales were about 572,000.It is still the second-worst on record.

In the report, the median sales price of new homes sold in February fell to $200,900, down 18% from $245,300 same month last year considered as the sharpest year-over-year decline in history.  The median price is the midpoint, where half sell for more and half for less.

Also in the report is the inventory of new homes for sale at the end of February which was a seasonally adjusted 330,000. With the current sales pace, the government said it would take over a year to exhaust the supply of new homes on the market. The sales pace is also affected by the glut of unsold homes and competition from deeply discounted foreclosed properties which puts in more pressure on prices.

Some analyst sees that the rise in new home sales has been influenced by the stimulus signed by President Barack Obama wherein first time buyers are given $8,000 tax credit.

In February, sales increased nearly 10 percent in the South and 7 percent in the West compared to previous month.  Drops were recorded in the Midwest by 9 percent and in the Northeast by 3 percent.

U.S. home prices rose in January for the first time in ten months. The increase amounted to 1.7 percent on a seasonally-adjusted basis January from the previous month according to the House Price Index report released Tuesday by the Federal Housing Finance Agency.

The index is still down 9.6 percent from their peak in April 2007. For a 12-month period ending January 2009, U.S. Home prices fell 6.3 percent.The government noted that sales in January were "relatively low," which could skew the result.

The FHFA monthly index computation is based on the purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac thus reflecting only mortgages backed by Fannie Mae and Freddie Mac. This excludes homes with jumbo mortgages and those backed by subprime loans. On Monday, the National Association of Realtors said the U.S. median home price was dropped to  $165,400 in February as a foreclosures continue to flood the market.

For the nine Census Divisions, seasonally-adjusted monthly price changes from December to January ranged from 0.9 percent decline in the Pacific Division which includes Hawaii, Alaska, Washington, Oregon and California, to 3.9 percent increase in the East North Central Division which includes Michigan, Wisconsin, Illinois, Indiana and Ohio.

The January home sales reflected in the FHFA data disproportionately occurred in areas with the strongest markets. While it is difficult to perfectly control for changing geographic mix in estimating house price indexes, the data suggest that if one were to remove those effects, the change in home prices in January, while still positive, would have been far less dramatic.

It also should be noted that sales volumes, in absolute terms, were relatively low in the month which could skew results. Accordingly, the estimation imprecision associated with the January estimate is relatively large and subsequent revisions to the monthly figure could be significant.

Sales of existing homes increased in February after a sharp drop in January according to an industry report released Monday.

The National Association of Realtors report said that existing home sales increased 5.1 percent in February to a seasonally adjusted annual rate of 4.72 million units from a rate of 4.49 million in January.

Existing-home sales includes single-family, townhomes, condominiums and co-ops.

According to NAR, Even so, sales activity remains behind last year’s level by nearly 4.6 percent as more layoffs are expected and buyers waiting for housing provisions in the economic stimulus package to take effect.

Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.

”Yun said that the sales activity in the West is much stronger than expected. “Strong sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years,” he said.

The national median existing-home price was $165,400 in February registering a 15.5 percent decline compared last year when the median price was $195,800.Prices were depressed by the large number of foreclosed properties on the market, said NAR chief economist Lawrence Yun in a statement.

"Our analysis shows that distressed homes typically are selling for 20% less than the normal market price, and this naturally is drawing down the overall median price."

Meanwhile, the total number of existing homes on the market at the end of February rose 5.2% to 3.80 million units. At the current sales pace, it would take an estimated 9.7 months to sell down that inventory of properties.

Regionally, existing-home sales in the Northeast increased 15.6 percent to an annual pace of 740,000 in February, but are down 14.9 percent compared to February 2008 levels. The median price in the Northeast was $251,200, 4.8 percent behind from a year ago.

In the Midwest, existing home sales rose 1.0 percent in February to 1.04 million but are 14.0 percent lower than February 2008. The median price in the Midwest was $131,000, which is 7.8 percent below February 2008.

Existing-home sales in the South increased 6.1 percent to an annual pace of 1.74 million in February but are 11.2 percent behind a year ago levels. The median price in the South was $146,700, down 10.0 percent from a year ago.

In the West, existing-home sales increased 2.6 percent to an annual rate of 1.20 million in February and remain 30.4 percent higher than a February 2008. The median price in the West was $204,600, which is 30.3 percent below February 2008.

The report also said the total number of homes for sale has steadily declined over the past six months from a record level last July.