Freddie Mac released last week its quarterly Conventional Mortgage Home Price Index (CMHPI) for the fourth quarter.

The classic series (which includes purchase and refinance transactions) recorded a 0.5% annualized decline in home values, improving from a revised negative1.5% annualized rate in the third quarter. The GSE said this was the first consecutive quarterly decline since 1982. Over the year, home values gained just 0.3% compared with 6.2% in 2006.

For the purchase-only series, Freddie Mac reported a 9.3% drop in prices in the fourth quarter on an annualized basis. This is the largest drop since the third quarter of 1972. For the year, prices in the purchase-only series were down 0.9%.

These results were in line with a recent report from the Office of Federal Housing Enterprise Oversight (OFHEO). The OFHEO reported a 0.1% annualized increase for all transactions, and a gain of 0.8% for the year in home prices. In its purchase-only index, the OFHEO had prices down 5.2% annualized in the fourth quarter. Year over year, prices were down 0.3%.

Looking at Freddie Mac's classic series by regions, the Pacific states, which include California, experienced the worst home price declines for the quarter and the year at 8.1% annualized and negatively 3.0%, respectively.

Other regions recording declines for the quarter were the Mountain states, which include Arizona and Nevada, at just negative 0.1% and South Atlantic, which include Florida, at negative 0.6%.

Year over year, however, the Mountain region held positive at 1.9% home price appreciation, while the South Atlantic states were slightly negative at -0.3%. New England states also recorded a year over year price decline of 0.9%, although it experienced a 1.2% annualized gain for the fourth quarter.

The East South Central, West South Central, West North Central and East North Central states all showed growth ranging from 2.8% to 3.5% annualized for the fourth quarter. Year over year, the highest growth areas were West South Central states at 4.6% and East South Central at 4.2%.

The West South Central states (AR, LA, OK, TX) are benefiting from "a robust energy industry," said Freddie Mac Deputy Chief Economist Amy Crews Cutts.

In the purchase-only series, all regions of the country had negative price declines for the quarter with (no surprise) the Pacific states ranking the worst at negative17.2% annualized. Freddie Mac added that only four states posted gains in home values during the quarter: Maine, North Dakota, South Dakota and West Virginia.

"The financial market turmoil that started in the third quarter continued into the fourth, making it harder to get mortgage financing for a home purchase or refinance and foreclosures continued to rise, putting additional stress on the inventory of homes for sale," Freddie Mac Chief Economist Frank Nothaft said.

(c) 2008 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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