Posted on Monday, 30th August 2010 by Charlotte W
U.S. home prices increased 3.1 percent the second quarter of the year, spurred by seasonal factors and the expiring federal tax credit, according to figures released today by secondary mortgage lender Freddie Mac.
The rate translate to a 13.2 percent gain on an annualize basis when compared to the first quarter of the year. Prices were down 0.2 percent compared to the same period one year earlier. “We saw increases in home values in the second quarter that were very strong across all regions,” said Amy Crew Cutts, deputy chief economist for Freddie Mac. “there is no doubt that some of this was due in part to the now-expired homebuyer tax credits which boosted sales activity as well as to the usual seasonal bump we see each Spring.”
Prices up, but appraised values decline
Oddly enough, although sales prices increased, home values – a measure that includes both sales prices and appraised home values obtained for mortgage refinancing – declined 0.5 percent during the quarter, an annual rate of 1.8 percent. Freddie Mac reported figures for both sales prices alone and home values for the quarter. The disparity reflects a more conservative approach to home pricing being taken by appraisers these days, as well as the impact of foreclosures on perceived home values, as compared to actual sales. Homebuyers had until April 30 to sign sales contracts for purchases to qualify for the homebuyer tax credit, with an original deadline of June 30, since extended, to close those sales. As a result, the tax credit had a strong effect on sales well into the second quarter of the year, which runs from April to June.
A temporary dip or start of a decline?
With mortgage interest rates down half a percentage point since the end of April, Cutts said Freddie Mac officials would be paying careful attention to home sales in August and September to gage whether July’s sharp drop-off in home sales was simply an aftereffect of the end of the tax credit or the start of a more sustained downturn. Home prices were up in all nine U.S. Census Divisions in the second quarter of 2010, for the first time in a year. Prices were up most sharply in the Great Lakes region of the East North Central Division (Ill. Ind,. Mich., Ohio, Wis.), which showed a 4.9 percent gain for the quarter (21.2 percent annualized). The smallest increase was in the Middle Atlantic Division (N.Y., N.J. and Pa.), which showed a 0.2 percent gain (2.4 percent annualized). The homes sales figures were from the Purchase-Only Series of Freddie Mac’s Convention Mortgage Home Price Index, which is based on repeat sales data for individual properties. The home values data was from the Index’s Classic Series, which combines appraisal data along with actual sales prices.
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Tags: Home Prices, Increase
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