U.S. home prices fell 1.3 percent in the fourth quarter, according to a government price index that excludes more expensive homes.

The fourth-quarter price declines erased previous gains for the year and left home prices down 2.4 percent from their April 2007 peak, according to a house-price index published by the Office of Federal Housing Enterprise Oversight (OFHEO).

OFHEO’s national purchase-only house-price index fell 0.3 percent between the fourth quarters of 2006 and 2007, but prices of other goods and services rose 4.3 percent, meaning average home prices fell 4.6 percent in real terms. It was the first four-quarter decline in OFHEO’s index since its inception in 1991.

“While the declines are significant and quite large in some areas, the market still needs to work through its overhang of unsold inventory,” said OFHEO Chief Economist Patrick Lawler in a statement. “How much further down that inventory will ultimately push prices will depend on a number of factors, including what happens to interest rates and the overall health of the U.S. economy.”

Another index published today by Standard & Poor’s estimated national home prices were down a record 8.9 percent in the fourth quarter from a year ago (see Inman News story).

OFHEO recognizes that its index can mask the true extent of price declines because it relies on data from Fannie Mae and Freddie Mac to calculate average prices from repeat sales of homes with conforming mortgages of $417,000 or less. The credit crunch has made nonconforming mortgages more expensive and harder to obtain.

Nevertheless, OFHEO’s index showed prices falling in every state but Maine during the fourth quarter. Only 16 states and Washington, D.C., experienced price declines for the full year.

States with the greatest year-over-year price declines were California (-6.6 percent), followed by Nevada (-5.9 percent), Florida (-4.7 percent), Michigan (-4.3 percent), and Rhode Island (-2.6 percent). Annual price appreciation was greatest in less populated, largely rural states, including Utah (9.3 percent), Wyoming (8.3 percent), North Dakota (7.9 percent), Montana (6.9 percent), and Alaska (6 percent).

Among 291 ranked metropolitan statistical areas (MSAs), 99 had annual price declines and 116 saw prices fall from quarter-to-quarter. In tracking price changes at the MSA level, in addition to sales of homes, OFHEO also includes appraisals that are conducted when homeowners refinance their loans.

Of the 20 MSAs with the largest year-over-year price declines, 18 were in California and Florida (Reno-Sparks, Nev., and Ann Arbor, Mich. were the exceptions).

Merced, Calif., saw the greatest annual price decline among 291 ranked MSAs (-18.98 percent) followed by Stockton, Calif. (-15.48 percent); Port St. Lucie, Fla. (-14.45 percent); Punta Gorda, Fla. (13.30 percent); Salinas, Calif. (-12.93 percent); Cape-Coral-Ft. Myers Fla. (-12.37 percent); Bradenton-Sarasota-Venice, Fla. (-12.35 percent), Naples-Marco Island, Fla. (-12.21 percent); Santa Barbara-Santa Maria-Goleta, Calif. (-11.94 percent); and Palm Bay-Melbourne-Titusville Fla. (-11.36 percent).

The 10 MSAs with the greatest annual price appreciation were Wanatchee, Wash. (13.67 percent); Houma-Bayou Cane-Thibodaux, La. (12.15 percent); Grand Junction, Colo. (12.03 percent); Ogden-Clearfield, Utah (10.80 percent); Bismark, N.D. (10.72 percent); Provo-Orem Utah (10.46 percent); Salt Lake City, Utah (9.68 percent); Logan, Utah (8.75 percent); Idaho Falls, Idaho (8.58 percent); and San Antonio, Texas (8.25 percent).

Top 20 declining markets

Source: Office of Federal Housing Enterprise Oversight

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×