The rate of decline in U.S. home prices slowed during the second quarter, but the 4.8 percent year-over-year drop in a house-price index that relies on data from Fannie Mae and Freddie Mac was the largest in the index’s 17-year history.

The Office of Federal Housing Enterprise Oversight’s national purchase-only house-price index showed prices falling a seasonally adjusted 1.4 percent during the second quarter, compared with 1.7 percent in the first quarter.

Looking back a year, the purchase-only house-price index fell 4.8 percent. An OFHEO index that includes not only sales of homes, but valuations conducted when homeowners refinance their loans, showed prices down 1.7 percent from a year ago.

With the price of other goods and services increasing by 5.3 percent over the last year, the purchase-only index shows national home prices falling approximately 10.1 percent in real terms, OFHEO said. The all-transactions index, which includes refinancings, showed a 7 percent decline in real terms.

OFHEO says the indexes can understate both price declines and gains in some markets, in part because they do not include mortgages too large or risky to be purchased or guaranteed by Fannie Mae and Freddie Mac. But the indexes provide insight into trends at the state and metropolitan statistical (MSA) level. According to the all-transactions index, during the second quarter, home prices fell in 207 of 292 ranked MSAs.

With the exception of Las Vegas, the 20 hardest-hit MSAs were in California and Florida. Six California MSAs saw double-digit price declines during the quarter — Merced (-15.9 percent), Stockton (-14.3 percent), Modesto (-12.3 percent), Salinas (-11.9 percent), Vallejo-Fairfield (-11.8 percent), and Riverside-San Bernardino-Ontario (-11.1 percent).

The six hardest-hit markets saw one-year price declines of more than 20 percent, with prices down 34.5 percent in Merced and 31.7 percent in Stockton.

The all-transactions index shows the five states with the sharpest year-over-year depreciation were California (-15.8 percent), Nevada (-14.1 percent), Florida (-12.4 percent), Arizona (-9.2 percent), and Rhode Island (-4.8 percent).

"The most overbuilt areas of the country — including California, Nevada, Arizona and Florida — contrast greatly with most other states, where prices are declining more moderately or even increasing," said OFHEO Chief Economist Patrick Lawler in a press release. "Nationally, the substantial declines in the weakest markets have driven seasonally adjusted prices down to late-2005 levels."

Despite recent declines in some markets, the majority of MSAs are still showing positive growth over four quarters. The MSAs with the greatest appreciation over the past year were Houma-Bayou Cane-Thibodaux, La. (9.1 percent), Decatur, Ala. (6.4 percent), and Charleston, W.Va. (6 percent).

The five states with the greatest price appreciation between the second quarters of 2007 and 2008 were: Oklahoma (4.9 percent), Wyoming (4.4 percent), South Dakota (3.8 percent), North Carolina (3.6 percent), and North Dakota (3.6 percent).

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
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