Yesterday, the Office of Federal Housing Enterprise Oversight (OFHEO) published their Home Price Index (HPI) data for Q3 2007 showing continued deceleration of home price appreciation in most regions as well as a broadening of outright declines now including 23 states declining from their respective peaks and 11 states declining on a year-over-year basis.Topping the list of peak decliners by state is Michigan at -9.22%, California at -8.52%, Nevada at -6.43%, Rhode Island at -5.45%, Massachusetts at -5.14%, Florida at -4.81% and New Hampshire at -2.22%.
Topping the list of year-over-year decliners by state is California at -7.24%, Michigan at -7.07%, Nevada at -6.43%, Florida at -4.56%, Rhode Island at -3.16% and Massachusetts at -3.01%.
The OFHEO HPI series is formulated from home purchase and refinance information collected from Fannie Mae and Freddie Mac and as such suffers slightly from some basic limitations of the data.First, Fannie and Freddie mortgages are subject to conforming loan limits which eliminates huge portions of data that are particularly relevant given the current bloated state of home prices.
A great percentage of home purchases made in the last decade, especially in the bubbliest areas, were made with Jumbo loans that, by their definition, exceed the Fannie-Freddie conforming loan limits and as such are not included in the OFHEO data.
Also, data from mortgages made for the purpose of refinance are also included which may have a tendency to skew the HPI series.
Fortunately, OFHEO now produces “Purchase Only” indices (i.e. HPI indices derived only from home purchase mortgage data only) for all census and states statistical areas.
In general, because the “Purchase Only” indices are based on home price changes from only home purchase transactions, they tend to show a greater degree of deceleration and/or decline than the complete data indices and may be a better indicator of the overall state of each particular housing market.
Although it’s generally recognized that the S&P/Case-Shiller (CSI) home price indices are more accurate than the OFHEO indices, OFHEO offers data for over 400 different census, state and metropolitan statistical areas compared to only 20 major metro areas for the CSI.
I have released a new version of the OFHEO HPI Charting Tool updating the data as well as adding some additional features that make the tool more useful and fixing a few bugs to boot!
The OFHEO HPI Charting Tool allows you to visualize the HPI data as well as compare data from different areas.
Additionally, the tool now fully supports the “Purchase Only” data as well as allowing you to “normalize” the data in order to make a true comparison from one area to another.
