Government report: U.S. year-over-year home prices up

WASHINGTON – Nov. 29, 2007 – U.S. home prices marked a quarterly decline for the first time in 13 years in the third quarter, according to government data released Thursday that provide fresh evidence of the housing market slump.

Home prices dipped 0.4 percent nationwide in the July-September period, compared with the previous quarter, the Office of Federal Housing Enterprise Oversight said.

Compared with the third quarter of 2006, U.S home prices posted an increase of 1.8 percent, but it was the smallest year-over-year increase since 1995, according to the agency, which oversees the big mortgage-finance companies Fannie Mae and Freddie Mac.

“While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” agency director James B. Lockhart said in a statement. Prices declined in more than 20 states, he said.

Also on Thursday, the Commerce Department said the median sales price of a new home fell 13 percent in October, compared with a year ago, to $217,800. It was the biggest annual decline since September 1970 in the median price, the point at which half of homes sell for more and half for less.

A mortgage research firm, meanwhile, said U.S. foreclosure filings nearly doubled in October from the same month last year. A total of 224,451 foreclosure filings were reported in October, Irvine-based RealtyTrac Inc. said Thursday.

According to OFHEO’s data, many of the cities and states experiencing the sharpest declines in the quarter were the same areas that had posted the sharpest increases a couple of years ago during the housing boom.

Price declines were steepest in California (down 3.6 percent), Massachusetts (2.3 percent), Michigan (3.7 percent), Nevada (2.4 percent) and Rhode Island (2.2 percent).

“Rising inventories of for-sale properties are clearly having a material impact on home prices,” said Patrick Lawler, the agency’s chief economist.

Other measurements of home prices have been falling for some time while OFHEO’s index, until now, had continued to rise. The reason, economists say, lies in differences in how home prices are calculated.

The widely tracked Standard & Poor’s/Case-Shiller nationwide housing index, which fell 4.5 percent in the third quarter from last year, focuses on major metropolitan areas and includes expensive properties as well as cheaper ones. The federal government index, while more national in its scope, excludes higher-priced homes and ones financed by riskier mortgages.

A separate report Wednesday from the National Association of Realtors said the median price of a home sold in October declined to $207,800, a drop of 5.1 percent from a year ago, the biggest year-over-year price decline on record.

But many economists consider the OFHEO and Case-Shiller indexes to be better measurements of the housing market than the Realtors’ report, because both indexes examine price changes for the same properties over time instead of calculating a median price for houses sold during a particular month or quarter.

The OFHEO index is calculated solely using home loans of $417,000 or less that are bought or backed by government-sponsored mortgage companies Fannie Mae and Freddie Mac. Importantly, that excludes properties bought with some of the riskier varieties of home loans that have gone sour this year.

On the Net: Office of Federal Housing Enterprise Oversight: http://www.ofheo.gov

Copyright 2007 The Associated Press, Marcy Gordon, AP Business Writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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