A recent article in NAHB’s Eye on Housing blog points to recently released data from the Federal Housing Finance Agency (FHFA) that provides a slightly more optimistic view of the direction of local house prices than the national headlines typically suggest. FHFA’s data includes monthly home price indexes for the U.S. and the nine Census divisions for December, as well as quarterly home price indexes for the 50 states, the District of Columbia, and metropolitan statistical areas for the fourth quarter of 2011. This extensive geographic coverage is a huge improvement over other house price indicators like Case-Shiller, which cover the nation as a whole and only 20 specific metropolitan areas.
The fact of the matter is that, given the local nature of housing markets, national aggregate price indexes convey relatively little information, and price measures at the state and metropolitan area level provide much more information about local conditions. This is one of the reasons that NAHB recently developed the NAHB/First American Improving Markets Index, which currently spotlights 98 individual metropolitan areas in which housing conditions are improving.
The national FHFA index shows house prices up 0.7% in December over November, and up 1.8% from a March 2011 trough. Among the nine Census divisions, six were up by an average of 1.2% in December from the previous month, and eight were up an average of 2.8% since their early 2011 troughs. Among the 50 states and the District of Columbia, 28 of those saw prices increase from the third to the fourth quarter of 2011, and 38 were holding above their price troughs reached in early 2011. Four of these 38 areas turned the corner in the most recent quarter, while 30 areas have improved for the last two to four quarters and the remaining four have improved for over a year. Of the 384 metropolitan areas and divisions for which FHFA calculates indexes, 232 or 60% improved in the fourth quarter.
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