For the first time in almost 13 years, home prices in the United States experienced a quarterly decline, the Office of Federal Housing Enterprise Oversight reported Thursday.
The OFHEO House Price Index, which measures data from sales and refinance transactions, was 0.4% lower in the third quarter than the second quarter.
It was the first drop since the fourth quarter of 1994, and was widely expected thanks to growing inventories and uncertain buyers.
“Rising inventories of for-sale properties are clearly having a material impact on home prices,” said OFHEO Chief Economist Patrick Lawler, in a statement. “Until those inventories shrink, that will be a great source of resistance to price increases.”
Ten states saw home prices decline over the last four quarters, the greatest number of declines since the 1996-97 period, while 21 states saw price declines in the latest quarter.
“While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said James B. Lockhart, OFHEO Director.
“Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial,” Lockhart added.
Seventeen of the 20 cities experiencing the greatest depreciation were in Florida and California, and the remaining three were in Michigan.
The OFHEO said the markets that experienced some of the greatest appreciation in recent years were the same areas that experienced the largest decline, indicating price corrections in those markets.
It wasn’t all bad news however, as several states chalked solid rates of appreciation between the third quarter of 2006 and the third quarter of 2007, including Utah (12.9%), Wyoming (11.8%), Montana (7.7%), New Mexico (7.4%), and Washington (7.0%).
This week, the National Association of Realtors (NAR) reported a 5.1% year-over-year median price decline for October and the S&P/Case-Shiller index revealed a 4.9% yearly drop in the year ending September.
The OFHEO House Price Index, which only includes data tied to conforming loans but has a wider geographical reach than the NAR and S&P/Case-Shiller, experienced a slight increase from the first to second quarter of 2007.