U.S. home prices decline for first time since 1994

From Staff Reports

For the first time in nearly thirteen years, U.S. home prices experienced a quarterly decline, the Office of Federal Housing Enterprise Oversight said on Thursday.
Home prices were 0.4 percent lower in the third quarter than in the second quarter of 2007. The annual price change showed an increase of 1.8 percent , the lowest four-quarter increase since 1995.
 “While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said OFHEO Director James B. Lockhart. “Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.”
Many of the cities and states experiencing the sharpest declines this quarter were the same cities and states experiencing the sharpest increases just a couple of years ago, suggesting some price corrections in those markets.
Nationally, house prices grew at the same rate over the past year, as did prices of non-housing goods and services reflected in the Consumer Price Index. House prices and prices of other goods and services both rose 1.8 percent.
“Rising inventories of for-sale properties are clearly having a material impact on home prices,” said OFHEO Chief Economist Patrick Lawler. “Until those inventories shrink, that will be a great source of resistance to price increases.”
In other news, the U.S. experienced 224,451 foreclosure filings — default notices, auction sale notices and bank repossessions — during October, up 2 percent from the previous month and up 94 percent from last year. The national foreclosure rate for the month was one foreclosure filing for every 555 households.
“Overall foreclosure activity continues to register at a high level compared to last year, but it appears to have leveled off over the past two months after hitting a high for the year in August,” said James J. Saccacio, chief executive officer of RealtyTrac. “Default notices were down nearly 9 percent in October, indicating that some of the efforts on the part of homeowners, lenders and advocacy groups to find alternatives to foreclosure may be starting to have an impact. On the other hand, bank repossessions were up nearly 35 percent, evidence that more homeowners who enter foreclosure are losing their homes.”
Nevada, California, Florida topped the state foreclosure rates while Texas remained average with 12,288 filings or one filing per 735 households.
Nevada documented the highest foreclosure rate among the states for the tenth straight month, with one foreclosure filing for every 154 households — 3.6 times the national average.
California foreclosure activity decreased nearly 2 percent from the previous month, but the state’s foreclosure rate of one foreclosure filing for every 258 households still ranked second highest among the states.
Other states with foreclosure rates ranking among the nation’s 10 highest were Ohio, Georgia, Michigan, Colorado, Arizona, Indiana and Illinois.