By Kevin Chiu
Home prices declined an average of 4.4% on a year-over-year basis in the U.S. through August, despite a slight increase in home values over summer months as a result of higher home sales, and record low mortgage rates, according to real estate research firm CoreLogic. The decline in home values echoes Housing Predictor forecasts for most U.S. cities for the year.
The 0.4% August drop was the first decline in four months after a busier home buying season that ended part way through the typically busier summer home selling season.
The decline follows a 4.8% average drop for the year through July on a year to year basis compared to July 2010, and includes distressed home sales, which accounts for bank assisted short sales in which lenders cooperate to reduce the mortgage principal and foreclosure sales.
The most severe housing deflation during the year has been in Nevada, where home prices have averaged a drop of 12.4% as a result of record high foreclosure sales pressuring home prices lower, according to CoreLogic. Arizona had the second hardest hit in home values at 10.7%, followed by Illinois, which fell 9.6% through August, Minnesota, 7.8% and Georgia, 7.2%.
“The month over month decline was predictable, particularly given the renewed concerns over a double-dip recession, high negative equity and the persistent levels of shadow inventory,” said CoreLogic chief economist Mark Fleming.
The five states with the highest level of home appreciation experienced very little subprime or ALT-A mortgage lending during the real estate bubble. West Virginia had the highest percentage with an average of 8.6%, Wyoming was second, 3.6%; followed by North Dakota, 3.5%, New York, 3.2% and Alaska, 2.2%.
The change in the firm’s national Housing Price Index from April 2006 through August shows an average 30.5% decline for home prices. Eighty of the top 100 Core Based Statistical Areas in the U.S. measured by population showed year over year declines in August, eight less than July.