Core Logic, a heavily viewed monitor of U.S. home prices said its home price index dropped for the first time in 2010 in August, sending prices just 1.5% lower for the year. However, the index also showed positive appreciation in more than a handful of states.
The Core Logic index has had an unusually low rate of housing price deflation since it began monitoring more than 2,000 markets following the company’s separation from Fidelity Title Co.
The top five states the company monitors with the highest average appreciation during the 12-month period were Maine with 5.8%, New York, 3.7%; Connecticut, 2.5%; Virginia, 2.4%; and South Dakota, 2.1%. Maine, South Dakota and Virginia had very little subprime and Alt-A mortgage lending at the height of the market, reinforcing the fact that the most troubled markets sustained the highest levels of alternative mortgage financing.
“Price declines are geographically expanding as 78 out of the largest 100 metropolitan areas are experiencing declines, up from 58 just one month ago,” said Mark Fleming, Core Logic chief economist. The growth of deflationary markets is attributed to higher levels of distressed sales, including foreclosures and walk-aways by mortgage holders. High unemployment in the majority of the country is making it difficult if not impossible for many homeowners to make their mortgage payments.
Idaho suffered the highest level of housing price deflation with an average of 14% for the 12 months ending in August. Alabama sustained the second highest level at 10.4%, followed by Utah, 7.3%; Oregon, 6.3% and Florida, which was 6.2% lower on average for the year, according to Core Logic figures. Housing Predictor does not monitor housing deflation or inflation in markets on a monthly basis, but tabulates year end figures for its annual forecasts, which are updated throughout the year as local markets demand.