Home-Price Declines Slow In 1Q; Some Regions Post Growth

   DOW JONES NEWSWIRES 
 

House-price declines slowed markedly in the first quarter, according to Freddie Mac (FRE), with the drop being 5.3% on an annual basis.

That compares with an 18.5% annualized slump in the fourth quarter for the Conventional Mortgage Home Price Index. In the past four quarters, U.S. prices fell 8.4%, compared with the 9.7% decline for all of 2008.

Freddie chief economist Frank Nothaft said the slowing price drop "was consistent" across the country, with New England and the East North Central states actually seeing some increase from the fourth quarter. New England prices rose 0.8% in the first quarter, while the Rust Belt states of Illinois, Indiana, Michigan, Ohio and Wisconsin recorded a 0.5% increase. That region has been among the most stagnant economically as the recession wears on.

The three Pacific Coast states plus Alaska and Hawaii reported the biggest first-quarter price drop - 4%. The average has slid 21% the past year, by far the worst performing region. California markets were among the fastest rising before the housing bubble burst.

Nothaft said price declines will continue in markets with high levels of vacant homes for sale, likely resulting in the home-price index falling nationally "over several more quarters. Nonetheless, it is important to realize that some local markets will experience stable or modestly rising prices even though the national metric may decline."

Falling home prices have been a key part of the drop in surging delinquencies and foreclosures. The declines, especially in what were some of the nation's most-overheated markets, have prevented borrowers from refinancing their mortgages as the loan amount exceeds the home's reduced value. As such, some borrowers not forced out are voluntarily giving up their homes without hope they could break even soon.

-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136; [e-mail]