Check out this announcement today from the Office of Federal Housing Enterprise Oversight, the organization that oversees mortgage-buying giants Fannie Mae and Freddie Mac. OFHEO (pronounced “oh-FAY-oh”) says that single-family house prices were 7.7% higher in the third quarter of 2006 than one year earlier.* It said they grew at an annual rate of about 3.5% from the second to the third quarter of 2006. A slowdown, but not a decline.
There were declines from the second to the third quarter in only five states: New York, Rhode Island, New Hampshire, Michigan, and Massachusetts. And only Michigan was lower than a year earlier.
Idaho, Utah, Oregon, and Arizona were all up 16% to 17% from a year earlier.
Kind of amazing, when the Census Bureau and National Assn. of Realtor numbers show prices flat to falling. There are a couple of explanations. One is that the OFHEO index covers only single-family, detached homes with conforming mortgages, which currently are around $400,000 or less.
A more interesting difference is that the NAR figures, in particular, have been skewed downward by a change in the mix of homes being sold. When more cheap homes are sold, it pulls down the median sales price. OFHEO uses a statistical method to compare prices as particular homes are sold and resold over the years, avoiding the mix problem.
The OFHEO numbers are consistent with the S&P/Case-Shiller Home Price Indices released Nov. 28, which showed that prices in 10 major markets rose 3.7% in September from a year earlier.
*Asterisk for those who care: The OFHEO index uses valuations reported in refinancings as well as in sales. That number is influenced by overstatement of valuations. OFHEO’s purchase-only index shows a 6% increase from a year earlier rather than 7.7%.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.