Posts Tagged ‘Home Price Index’

The Home Price Index shows Home Values lower broadly, but not specifically

March 26th, 2010

Home Price Index April 2007 to January 2010

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Home values fell again in January, according to the Federal Home Finance Agency’s Home Price Index. Values were reported down 0.6 percent, on average.  We say “on average” because the Home Price Index is a national report. It doesn’t capture the essence of a local market like Stanislaus County , or even a city market like Stockton.  The most granular that the monthly Home Price Index gets is regional and January’s report shows that:

  • Values in the Mountain states rose 2.0%
  • Values in the Pacific states were flat
  • Values in the East North Central states fell 1.8%

It’s hardly helpful for home buyers entering the market, or home sellers trying to properly price a home.  Furthermore, because the Home Price Index reports on a 2-month delay, its data fails to reflect the current market conditions.  Versus January — the period from which HPI data is collected — mortgage rates are lower, buyer activity is up, and the federal home buyer tax credit is closer to expiring.  These each can have an impact on housing.  Ultimately, national real estate data like the Home Price Index is best suited for lenders and policy-makers.  National data helps to identify trends that shape formal policy, but it doesn’t help you, specifically.   Since peaking in April 2007, the Home Price Index is off 13.2%

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What’s ahead for mortgage rates this week: March 1, 2010

March 1st, 2010

Non-Farm Payrolls Feb 2008-Jan 2010

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Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.  Mortgage rates are now at their lowest levels since early-February.  Last week was heavy on negative data:

In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.  The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.  Bernanke stayed on message — the Fed Funds Rate will stay low for an extended period of time.

Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.  This week, mortgage rates will jockey around Friday’s Non-Farm Payrolls report.  Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February.  If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it’s worse, rates will rise.

Other important data this week include Personal Consumption Expenditures — the Fed’s preferred inflation gauge — plus the Fed’s Beige Book release.  Mortgage rates remain in flux so float with caution.  Mortgage rates look good today, but by Friday, they could be much, much worse.

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The Home Price Index shows some regions up, some regions down

February 26th, 2010

Monthly changes in Home Price Index Since April 2007

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Earlier this week, the private-sector Case-Shiller Index showed home prices slightly lower between November and December.  Thursday, the public-sector Home Price Index showed the same.  Publishing on a 2-month lag, the Federal Home Finance Agency said home prices fell by 1.6 percent nationally in December.  And that’s an average, of course.  Some regions performed well in December as compared to November, others didn’t.

  • Values in the Middle Atlantic states improved slightly
  • Values in New England were essentially unchanged
  • Values in the Mountain states sagged, down 3.5%

These aren’t just footnotes. They’re an important piece toward understanding what national real estate statistics really mean. In short, “national statistics” are just a compilation of a bunch of local statistics.  For example, if we dig deeper into the FHFA Home Price Index 70-page report, we find that cities like Terre Haute, IN, Buffalo, NY, and Amarillo, TX posted year-over-year home price gains. You won’t see that in a “national” report.

Furthermore, it’s a sure bet that those same cities, you could find neighborhoods that are thriving, and others that are not.  Just because the city shows higher home values overall, it won’t necessarily be the case for every home in the city.  Every street in every neighborhood of every town in America has its own “local real estate market” and, in the end, that’s what should be most important to today’s buyers and sellers.  National data helps identify trends and shape government policy but, to the layperson, it’s somewhat irrelevant.  So, when you need to know whether your home in Lodi is gaining or losing value, you can’t look at the national data.  You have to look at your block — what’s selling and not selling — and start your valuations from there.

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