Home prices rise 0.9% in Q3

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

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