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Clear Capital Evaluates Recent FHFA Data

The ""Federal Housing Finance Agency"":www.fhfa.gov/ (FHFA) reported a 1.0 percent rise in U.S. house prices between the timeframe of October to November. ""The previously reported 0.2 percent decrease in October was revised downward to reflect a 0.7 percent decrease,"" according to FHFA. ""For the 12 months ending in November, U.S. prices fell 1.8 percent. The U.S. index is 18.8 percent below its April 2007 peak and roughly the same as the February 2004 index level.""


Dr. Alex Villacorta, director of research and analytics at ""Clear Capital"":www.clearcapital.com/ commented that ""the latest readings from the FHFA Home Price Index (HPI) indicate that home prices have risen 1 percent on a seasonally-adjusted basis, yet the more stable and indicative measure of overall market performance can be found in the 1.8 percent decline on a yearly basis.""

Villacorta continued, ""Much of the growth that we are seeing in home prices are coming from areas where there is significant investor activity, and all-cash purchases.""

The FHFA monthly index is calculated by taking the purchase prices of houses backing mortgages that have either been sold to or guaranteed by Fannie Mae and/or Freddie Mac. The nine different census divisions displayed a range from -0.2 percent in the Mid-Atlantic division to +2.1 percent in the West South Central division. This range was shown through the seasonally adjusted basis of October to November.

""As this index is calculated using sale prices from only the conforming loan segment of the market, it has a tendency to understate both gains and losses than the broader market,"" says Clear Capital's Villacorta.

""While the latest FHFA reading is within 1 percentage point to our 2.8 percent yearly decline published in our [Clear Capital] October Market Report, our data through the end of January 2012 suggests that these short gains are quickly diminishing as the traditionally slow winter season takes hold, particularly in the Midwest markets,"" concluded Villacorta on the topic.

The next release of information by FHFA will be towards the end of February, which will include the monthly HPI regarding the month of December, as well as quarterly HPI data concerning the fourth quarter of 2011.

About Author: Abby Gregory


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