by Calculated Risk on 3/25/2008 10:14:00 AM

OFHEO is now releasing a monthly House Price Index. Note that this is a National index, but only uses data from Freddie and Fannie.

From OFHEO: New U.S. Monthly House Price Index Estimates 1.1 Percent Price Decline in January

U.S. home prices fell approximately 1.1 percent on a seasonally-adjusted basis between December 2007 and January 2008, according to OFHEO’s new monthly House Price Index. For the 12 months ending in January, U.S. prices fell 3.0 percent. Since its peak in April 2007, the monthly index is down 4.1 percent.

The monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.

Click on graph for larger image.

This graph from OFHEO shows the monthly change for the Purchase Only index.

When comparing the national Case-Shiller and OFHEO indices, there are a number of differences: OFHEO covers more geographical territory, OFHEO is limited to GSE loans, OFHEO uses both appraisals and sales (Case-Shiller only uses sales), and some technical differences on adjusting for the time span between sales.

OFHEO economist Andrew Leventis’ research suggests that the main reason for the recent price difference between the Case-Shiller and OFHEO indices was that prices for low end non-GSE homes declined significantly faster than homes with GSE loans. This was probably due to the lax underwriting standards on these non-GSE subprime loans. Note that Leventis' research focused on the differences in the indices for the period from Q3 2006 through Q3 2007. I suspect the Case-Shiller index will continue to see larger price declines than OFHEO as lending standards have now been tightened significantly for other non-GSE loans (especially jumbo loans).