by Calculated Risk on 5/22/2008 10:34:00 AM

From OFHEO: Decline in House Prices Accelerates in First Quarter

U.S. home prices fell in the first quarter of 2008 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.7 percent lower on a seasonally-adjusted basis in the first quarter than in the fourth quarter of 2007. This decline exceeded the 1.4 percent price decline between the third and fourth quarters of 2007 and is the largest quarterly price decline on record. Over the past year, prices fell 3.1 percent between the first quarter of 2007 and the first quarter of 2008. This is the largest decline in the purchase only index’s 17-year history.

Click on graph for larger image.

This graph, from OFHEO, shows the four quarter and quarterly price changes for the Purchase Only Index.

There are significant differences between the OFHEO index and the Case-Shiller index (see House Prices: Comparing OFHEO vs. Case-Shiller), but it's important to note that the Fed uses the OFHEO index to calculate changes in household assets - and this means the Flow of Funds report in Q1 will show a significant decline in the value of household real estate (no surprise, but the number will be large).