New federal home index gauges prices at 2004 levels

The Federal Housing Finance Agency House Price Index (FHFA HPI) released today shows continued easing on housing prices, which declined 1.6 percent from January to February on a seasonally adjusted basis. The year-over-year change in February shows 5.7 percent decline.

The FHFA Index is 18.6 percent lower than its peak in April 2007 and currently stands at the February 2004 index level.

It appears that the flood of distressed sales and investor purchases continue putting downward pressure on prices, according to the National Association of Realtors.

The FHFA’s index also does not include cash transactions, which were roughly 33 percent of sales in February, according to NAR. The all-cash transactions also continue to grow due to tougher credit restrictions.

The FHFA index only captures the purchase prices of houses bought with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. This figure excludes mortgages backed by the FHA, which accounted for roughly 15 percent of home sales in December.

The January to February HPI change is similar with the trend shown in NAR’s median sales price data for the same period. The following month, February to March, NAR shows increase in home prices.