Freddie Mac reported that growth in home values rose by an annualized rate of 5.1% nationwide in the first quarter of this year. The GSE reported this in its quarterly Conventional Mortgage Home Price Index (CMHPI) released this morning. The annualized rate is down from a revised 5.2% for the last quarter of 2002. There was a significant upward revision for the fourth quarter values suggesting the housing market in that quarter was stronger than estimated. The revisions reflect delays between origination and funding by Freddie or Fannie Mae during a period of strong home-value appreciation.
Freddie’s chief economist Frank Nothaft said that the rise in home values is still adding to homeowner equity across the nation. He added that the average single-family home has increased in value in each state, both in the last quarter as well as year-over-year. However, offsetting the moderate rise in home values are the historically low in mortgage rates, said Nothaft.
The index also showed that the annual house-price appreciation rate was 6.4% from the first quarter of 2002 through the first quarter of 2003. The annual growth rate ending with the first quarter of this year is the slowest since the annual growth rate through the fourth quarter of 1999.
The Pacific States led in house price growth for the first quarter, rising at a vigorous annualized rate of 7.8%. These were followed closely by the New England States, which had a growth rate of 7.5%. The Middle Atlantic States showed the third strongest gains for the nation, with a home-price growth rate of 7%. The South Atlantic States posted 5.8% gains while the West North Central States came next with only 3.6%.
The East South Central States registered a rise in home values of 3.5% while the East North Central States showed a rise of 3.4%. Lastly, the West South Central States experienced a modest increase of 3.3% in home values as homeowners in the Mountain States trailed the nation with a growth rate of only 2.5%.
The refinance share of mortgage originations last year was 59%, This year Freddie expects this share to rise to 62% of originations. The GSE also expects home purchases to set a new record.
Freddie economists predict single-family mortgage originations to be strong this year. With low mortgage rates now available, total single-family originations should top $2.7 trillion.
Meanwhile, the Office of Federal Housing Enterprise Oversight (OFHEO), yesterday came out with released its House Price Index (HPI).
The report said that average U.S. home prices rose 6.48% from the first quarter of 2002 through the first quarter of 2003. The quarterly national average price appreciation showed continued deceleration at 0.94% versus a revised 1.3% last quarter. The trend over the previous three quarters shows continued gradual deceleration, with quarterly growth reaching nearly a five-year low. OFHEO also stated that all states experienced positive growth this quarter. Of the 220 ranked Metropolitan Statistical Areas (MSAs), 12 experienced negative quarterly growth, compared with 22 last quarter. California still dominates the Top 20, with 11 MSAs showing continued robust appreciation. Also, Florida currently has four MSAs ranked in the Top 20.