Home prices rose for the second quarter this year, according to Freddie Mac’s quarterly national Conventional Home Price Index (CMHPI) Purchase-Only Series released Tuesday, adding evidence the nation’s housing market is warming up.
The government mortgage entity’s home-price-growth index rose 0.9 percent in the third quarter, following an upwardly revised 2 percent pickup in the second quarter. The increases of the past two quarters made up for about two-fifths of the declines registered during the final quarter of 2008 and the first quarter of 2009. U.S. home-sale prices were down 3.9 percent year-over-year.
"The home-price gains of the past two quarters reflect improving existing-home sales over that period. Sales volume was up 15 percent between the first and third quarters of this year," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.
"The lowest average fixed-rate mortgage rates in a half-century, lower house prices, incentives to encourage first-time buyers, and loan modification efforts to stem foreclosures have worked together to support sales and reduce the inventory of unsold homes."
Seven of the nine U.S. Census divisions saw increases in prices in the third quarter, although "prices are still down relative to their peaks in most markets," Nothaft said.
"Values in the New England, East North Central and Pacific divisions are at 2004 levels, on average, and the South Atlantic, West North Central, and Mountain states’ home values are at 2005 levels.
"In contrast, average values in the West South Central area have tied their previous peak from the third quarter of 2008, while average home values in the Middle Atlantic and East South Central states have reached 2006 and 2007 levels, respectively," he added. …CONTINUED
The biggest gains came in the Pacific region, which jumped up 3.9 percent in the third quarter of 2009, followed by the Middle Atlantic region, up 1.1 percent.
The South Atlantic region rose 0.6 percent, and the West North Central region rose 0.5 percent. Both the East South Central and East North Central regions rose 0.2 percent. The West South Central region saw the smallest growth at 0.1 percent.
Two regions saw decreases in home prices. The Mountain region decreased 0.6 percent, and the New England region fell by 0.7 percent.
Warming trends in the housing market are also evident in a Standard & Poor’s/Case-Shiller U.S. National Home Price Index report, which also showed a second consecutive quarterly increase in the third quarter, albeit a rosier 3.1 percent increase.
Freddie Mac’s Conventional Mortgage Home Price Index Purchase-Only Series is constructed from observations of actual sales prices or appraised values of the same homes over time.
The index excludes all refinancings in its calculations. It includes transactions on one-unit detached and single-family townhouse properties serving as collateral on loans originated through the third quarter of 2009 and purchased by Freddie Mac or Fannie Mae by Oct. 31, 2009.
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