Beware of National #s, MBA Economist Says

National statistics that show deeply declining house prices are driven by only a few states, the Mortgage Bankers Association's top economist has warned. Because the numbers are heavily weighted by sales in California and Florida, house price figures as reported by the Case-Shiller and OFHEO indices are "not representative of the entire country," acting chief economist Jay Brinkman said at the MBA's National Secondary Market Conference in Boston. Mr. Brinkman pointed out that the states that registered the biggest jump in prices in the first part of the decade are those that have also recorded the greatest declines. Moreover, prices in "most states" are still at the highest levels ever recorded, he added. The economist said most price declines are driven largely by the needs of builders, investors, and recent buyers of houses erected since 2000 to sell houses. "It's the newer neighborhoods that are driving prices," he said. "Prices in established neighborhoods are holding their own" because the owners don't have to sell. Mr. Brinkman said one drag on housing sales will be the fact that many first-time buyers in their 30s will not be available because they bought in their 20s. But he also said this negative could be offset, depending on how soon renters believe the for-sale sector has hit bottom. "If there is an error" in housing forecasts, he said, "it's in how many renters will perceive the market has reached the bottom and become buyers."