by Calculated Risk on 8/27/2008 05:13:00 PM

From Freddie Mac: National Home-Value Drop Moderates in Second Quarter

Freddie Mac (NYSE: FRE) announced today that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a modest 0.4 percent annualized decline in U.S. home values during the second quarter of 2008, following a downward revised 10.8 percent annualized drop in the first quarter. Over the four quarters ending with the second quarter of 2008, home sales prices fell an average of 6.0 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series.

"While U.S. home value indexes continued to decline, an encouraging sign has been the significant moderation in the rate of decline of the Purchase-Only series," said Frank Nothaft, Freddie Mac vice president and chief economist. "After falling sharply over the prior two quarters – more than a 10 percent annualized drop – home value depreciation slowed substantially to only a 0.4 percent annualized rate. While we expect to see further declines in average U.S. home values throughout this year and into 2009, we will be watching for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales and for-sale inventories.

Click on graph for larger image in new window.

This graph shows the year-over-year change in the Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series vs. the quarterly change (annualized).

Guess what? There is a strong seasonal component to the series, and I see nothing encouraging about this "moderation" when seasonal factors are considered.

The headline could have read:

"Worst Second Quarter Ever for Freddie Mac CMHPI Purchase-Only House Price Series"