FHFA Reports Slight Decrease in Home Prices

U.S. housing prices fell by half a percent in the first quarter of 2009, the smallest decrease since the housing downturn began, according to a figures released Wednesday by the Federal Housing Finance Agency (FHFA).

The 0.5 percent seasonally adjusted decline comes on the heels of a 3.29 percent drop in the fourth quarter of 2008, which was the biggest quarterly drop since the downturn began in the third quarter of 2007.

Based on Fannie, Freddie data

The survey is based on home sales information derived from mortgages acquired by government-backed lenders Fannie Mae and Freddie Mac. For the year, home sales prices declined 7.14 percent, the FHFA said.

"Our latest data are consistent with growing evidence that housing market conditions may be stabilizing in some parts of the country, especially areas not covered by the other major repeat sales price index," said FHFA Director James Lockhart. "I am hopeful that this first quarter data combined with recent market stimulus programs, such as the first-time homebuyer tax credit and President Obama's Making Home Affordable Program may mean that home price depreciation may be easing."

Smaller decline than other reports

The results contrast with two other housing sales reports that came out this week, the Standard and Poor's Case-Shilling Index and the National Association of Realtors' (NAR) survey of Existing Home Sales. The Case-Shilling survey reported a 19.1 percent decline in housing prices since the first quarter of 2008, and a 2.2 percent decline in March 2009 alone. The monthly NAR survey reported a 15.4 percent decline since April 2008.

The differences in results can be largely attributed to methodology. Because the FHFA survey is based on data from Fannie Mae and Freddie Mac, it only tracks sales on homes with conforming loans, which are limited to $417,000 in most portions of the country, and $625,000 in certain high-cost areas. Because the steepest drops in housing prices were at the top end of the market, those are not reflected in the FHFA report.

The FHFA report said prices declined by 1.1 percent in March, almost wiping out gains posted in January and February. By contrast, Case-Shilling reported a 4.1 percent decline during the same period, continuing an unbroken string of monthly declines since January 2001 in that report, while the NAR reported a 3.5 percent increase in prices from January to April 2008.