OFHEO Index Highlights GSE/Home Price Link

A house price index based on Fannie Mae and Freddie Mac mortgage data shows that house prices plunged in key states -- California and Florida -- where the mortgage giants suffered most of their credit losses in the second quarter. The Office of Federal Housing Enterprise Oversight HPI said house prices (based on purchase mortgage and refinancing data) fell by 6.9% in California, 5.6% in Nevada, 5.3% in Florida, and 4.4% in Arizona in the second quarter. Nationally, the OFHEO HPI fell 1.4% in the second quarter and 1.7% since the second quarter of 2007. "Tighter credit conditions and relatively high inventory levels have led to some sharp price declines in the second quarter," OFHEO Director James Lockhart said in releasing the second-quarter report. OFHEO's purchase-only HPI shows that house prices fell 1.4% in the second quarter and 4.8% since the second quarter of 2007. The purchase-only HPI was flat from May to June. However, the inflation-adjusted price of homes is down 10% from that of a year ago.