US HOUSE PRICES Increased in Q3 2009

US house prices increased slightly in the third quarter of 2009 according to the just released Federal Housing Finance Agency’s (FHFA) house price index (HPI).

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This HPI is a better indicator of house price changes through time than median or averages prices because it is a constant-quality index, thus controlling for changes in the quality mix of transactions in each period. The HPI is calculated using home sales price information from Fannie Mae and Freddie Mac-acquired mortgages.

Acording to the data, US house prices increased 0.2 percent on a seasonally adjusted basis in the third quarter of 2009 but on a year-over-year basis they dropped 3.8%, which represents a deceleration compared to the second and first quarters of 2009 when house prices registered yearly declines of 6% and 7%, respectivlely.

The national average though, masks differences in changes in house prices across locations not only in terms of magnitude but also in terms of direction. In particular, house prices increased in only 19 out of the 51 states in the third quarter of 2009, while they remained flat in two states and decreased in the remaining 30 states. Mississippi, California, Georgia and Kansas were the best performing states, with quarterly house price increases of 2.2%, 2.1%, 2.0% and 1.8%, respectively.

The four worst performing states on a quarterly basis in Q3 2009 were Arizona, Idaho, Nevada and Delaware, where house prices decreased by 2.1%, 3.4%, 3.9% and 4.3%, respectively. House prices dropped also in the larger states of New York and Florida by 0.1% and 1.2%, respectively.

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