Good news for 2013!

Housing recovery revs up as home resales rise

JONATHAN ERNST | Reuters | November 19, 2012 | link

A

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, DC. Home resales took a surprise rise in October.

U.S. home resales unexpectedly rose in October, a sign that slow improvements in the country’s labor market are helping the housing sector recovery gain traction.

That, in turn, is feeding hopes among construction companies, whose sentiment rose for a seventh straight month in November to its highest level in six years.

The National Association of Realtors said on Monday that existing home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 4.79 million units.

That was above the median forecast of a 4.75 million-unit rate in a Reuters poll.

NAR economist Lawrence Yun said superstorm Sandy, which slammed in the U.S. East Coast on Oct. 29, had only a slight impact on home resales. The only region where the pace of sales slipped was the Northeast. But Yun said the storm could temporarily hold back the pace of sales in November and December.

Nationwide, the median price for a home resale was $178,600 in October, up 11.1 percent from a year earlier as fewer people sold their homes under distressed conditions compared to the same period in 2011. Distressed sales include foreclosures.

The nation’s inventory of existing homes for sale fell 1.4 percent during the month to 2.14 million, the lowest level since December 2002.

At the current pace of sales, inventories would be exhausted in 5.4 months, the lowest rate since February 2006.

The price increase last month was measured against October 2011, and since then distressed sales have fallen to 24 percent of total sales from 28 percent.

The share of distressed sales, which also include those where the sales price was below the amount owed on the home, was flat from September.

Meanwhile, the NAHB/Wells Fargo Housing Market index rose to 46 from 41 the month before, the group said in a statement. Economists polled by Reuters had predicted the index would remain unchanged at 41. The index was at its highest level since May 2006.

However, the gauge remained below 50, showing that the housing market was still some way off full recovery. Readings below 50 mean more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.

Still, the measure has made strong progress over the last year, helping to cement optimism in the sector. In November last year it stood at just 19. Housing led the financial crisis of 2008-09 and has been one of the biggest overhangs in the economic recovery.

“Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country,” said NAHB Chairman Barry Rutenberg in a statement.

Rates are on our side…

Mortgage rates boost housing recovery

SPOTLIGHT ON RESIDENTIAL REAL ESTATE
Prashant Gopal | SFGate | November 15, 2012 | link

U.S. mortgage rates declined to record lows, dropping borrowing costs after applications for refinancing rose for the first time in six weeks.

Mortgage rates at record lows have made refinancing more appealing and have helped the housing market recover by making purchases more affordable.

The rate of seriously delinquent U.S. mortgages, a proxy for the so-called shadow inventory of homes, fell to the lowest level since 2008 as employment improved and recovering housing demand made it easier for homeowners to sell.

The average rate for a 30-year fixed mortgage dropped to an all-time low of 3.34 percent in the week ended Thursday, McLean, Va.-based Freddie Mac said Thursday. The average 15-year rate slipped to 2.65 percent, also a record.

Delinquent rates

The percentage of home loans that were more than 90 days behind or in the foreclosure process fell to 7.03 percent in the third quarter from 7.31 percent in the previous three months, the Mortgage Bankers Association said Thursday. The rate was 7.89 percent a year earlier.

Delinquent homeowners are catching up on payments or finding alternatives to foreclosure as the economy improves. That’s helping to reduce shadow inventory – typically defined as homes with seriously delinquent mortgages, in foreclosure or held by banks and not for sale – and limiting the prospect that distressed properties will flood the market and depress prices.

“The drop of the shadow inventory is a real positive for the housing market because it reduces concerns that this backlog will be with us,” said Michael Fratantoni, the Mortgage Bankers Association’s vice president of research and economics.

The serious-delinquency rate was the lowest since the fourth quarter of 2008, when it was 6.3 percent. The percentage of loans in the foreclosure process at the end of the third quarter was 4.07 percent, down 20 basis points from June. That was the biggest drop in records dating to 1979, Fratantoni said.

More borrowers were able to make their monthly payments as the unemployment rate dropped to 7.8 percent in September, the lowest since January 2009. The federal Home Affordable Refinance Program is enabling Americans with little home equity to refinance, while delinquent homeowners who want to sell are finding it easier to unload properties as the supply of houses for sale remains tight, Fratantoni said.

Inventory tight

In some areas, “inventory levels of properties on the market have gotten to such a point that you’re seeing buyers snap up anything that comes on the market at a rapid rate,” he said.

At the end of September, 2.32 million existing homes were available for sale, 20 percent fewer than a year earlier, according to the National Association of Realtors. That represented a 5.9-month supply, the lowest since March 2006, near the peak of the housing boom.

Price boost

The decline in inventory is helping to boost home selling prices as buyers compete for properties. U.S. home prices jumped 5 percent in September from a year earlier, the biggest increase since July 2006, data provider CoreLogic Inc. said.

The overall U.S. mortgage delinquency rate – the share of loans at least one month late – fell to 7.4 percent in the third quarter on a seasonally adjusted basis from 7.58 percent in the previous three months, the Mortgage Bankers Association said.

States such as California and Arizona that don’t require court approval for foreclosures are seeing the most rapid improvement in delinquencies, while judicial states such as Florida, New Jersey and New York are falling behind, Fratantoni said. The foreclosure rate for judicial states was 6.6 percent in the third quarter compared with 2.4 percent in nonjudicial states, the largest gap going back to at least 2006, he said.

In Florida, 13 percent of loans are in foreclosure, the highest level in the nation, followed by New Jersey with 8.9 percent, Illinois at 6.8 percent and New York at 6.5 percent. The share of loans in foreclosure was 2.6 percent in California and 2.5 percent in Arizona, more than a percentage point below the U.S. average, he said.

More home bang for your buck…

These improvements add instant value to your home

Kathryn Weber | Chicago Tribune | November 15, 2012 | link
Simple updates for your homeTo launch your home makeover, start at the front of your home. (Steve Lasker/ Chicago Tribune photo / October 6, 1999)

Even with today’s real estate worries, our homes remain the single largest investments most of us make. And regardless of the market in your area, it’s always a good idea to make improvements that keep your home updated and refreshed. Some home improvements can take years to return the investment, while others are simple, calling for more elbow grease than money.

When to call a pro. When it comes to making improvements that add instant value, such as curb appeal, it helps to bring in a professional. If a designer or architect is out of your budget, look for one on Craigslist.com or through a local university who will work on an hourly basis. Landscape designers can help you create a cohesive landscape plan — something that helps maximize your budget and prevents costly errors. Some nurseries will provide a landscape plan, or one at reduced cost, if you purchase the plants through them.

Another great investment is a professional home inspector, who can advise you on problems with your house, helping you prioritize improvements.

Work from the outside in. To launch your home makeover, start at the front door; repaint in a color that contrasts with the trim. Give the front of your home a good cleaning and replace any dated house numbers, light fixtures and handle sets. Stain or paint porches or steps to make the house appear more polished.

Remove any trees or shrubs that are in line with the front door to boost curb appeal. If your home lacks trees or shade, invest in the largest tree possible and have it professionally installed. Other easy improvements are sod and hardscaping. If the yard is full of weeds, resodding is easy and makes a big impact. Adding simple gravel or mulched walkways in the garden or from porches to the driveway instantly gives a neat look. This is especially true of homes that lack walkways to the front door or that have trails in the backyard from pets and people.

Update. If your home has dated elements like popcorn ceilings, bright gold bathroom fittings and old wallpaper or fixtures, tackle these next. Lighting fixtures can be changed easily and inexpensively, often without the need for a professional electrician. Strip off wallpaper in favor a neutral coat of paint. Replace dated tile with a new wood floor. Many wood floors can be laid right on top of tile.

If there’s money left in the budget, go for energy savings with updated appliances that are energy efficient, and don’t forget to replace your water heater. Give some thought to a tankless model that only heats water when you need it. It can account for a giant cost savings over a traditional model that keeps water hot all the time.

Know your rights!

3 homeowner rights that are often underutilized

Mood of the Market

Tara-Nicholle Nelson | Inman News | November 12, 2012 | link

USA Today reports that about 132 million people showed up to vote in this year’s election. As large as that number sounds, that maps to only 60 percent of registered voters.

As I see it, everyone who voted (or tried to) did their civic duty, but I’m most humbled by our Floridian compatriots who had to wait in line for hours to cast their votes, and our East Coast neighbors who dialed in and otherwise took time out of their efforts to get back to normal post-Sandy life to make their voices heard.

The fact is, it’s all too easy in the course of everyday life to simply flake when it comes time to vote and exercise one’s civic rights. People do it for many reasons, from feeling like their single voice is too small to have an impact or simply finding it too inconvenient to take the time out of their already-hectic schedules.

Whether your ancestors came over on the Mayflower, a slave ship or via Ellis Island, though, they likely fought hard for your right to vote — and that’s good enough reason to bear the inconvenience to make your little tiny vote count.

In the real estate realm, it’s easy to feel like almost everything about the market, your mortgage and the value of your home is out of your control. But the truth is that there are many real estate rights that go unrecognized and, thus, unexercised:

1. The right to control your own utility bills. Many a homeowner feels slightly held hostage by their utility companies. Who else can you buy electricity, gas or water from, they wonder briefly, before waving a mental white flag when they sign the check for their monthly payment?

In truth, there is much a homeowner can do to control both the amount and the provider of his utility services. You can go solar, whether by buying panels yourself or working with a solar power service that owns the panels and charges you a reduced, preset rate for energy over 20 years.

And there are many other investments you can make — at many levels — in improving your home’s efficiency and, thus, reducing your utility bills. Things like installing dual-paned windows, improving your insulation, installing tankless or solar-powered water heaters, and converting every faucet to a low-flow fixture are among them.

On a less conventional side of things, installing graywater tanks that use wasted sink water for toilet flushing and landscaping, and replacing swathes of green lawn with low-water-consuming native landscaping or food gardens are some more work-intensive — but more rewarding — ways to put you back in control over your household’s energy and water consumption (and expenses).

2. The right to fire your mortgage lender. Most people find their mortgages to be burdensome, to say the least. Even those who aren’t among the 28 percent of homeowners with mortgages that are still underwater are almost always positioned such that their mortgage is their largest monthly expense and a looming financial obligation. Paying it off seems remote and hard to imagine; further, many homeowners will take out equity lines or refinance their mortgages over time, simply restarting the already long countdown to payoff.

But here’s a shocker: Roughly one-third of American homes are owned outright by their owners, free and clear of a mortgage. Truth is, there are many ways to get your home unmortgaged, and I’m not talking about asking your lender to forgive it.

You can exercise your right to live and own your home mortgage-free by pulling one or both of two basic levers: (1) you can cut your existing monthly spending and redirect your savings to paying down the principal balance of your home loan, (2) you can bring more income in, using that to pay your mortgage off earlier than planned, or (3) you can do both!

This might seem impossible, but if this is a right you’d like to exercise, calendar a few quiet hours to really review last month’s bank statements. What you face is a decision about values and priorities: What’s really important to you?

Some financial experts advise that lunches and dinners out, coffee shop stops and cable TV are common categories of budget leaks — these seemingly small expenses add up. But don’t go extreme and try to deprive yourself of every night out or coffee chat with your friends; it’s not sustainable, and you’ll end up turning these moments of happiness into moments of guilt. Instead, cut back where you feel you want to and also cast an eye at larger expenses that can be eliminated.

I’ve known homeowners who have found hundreds of dollars a month they could redirect away from cable TV packages they didn’t really watch and payments for cars and other big toys (motorcycles, boats, etc.) they didn’t really drive.

In the same vein, it can be relatively painless to turn your hobbies or passions into small-scale side businesses, generating some early mortgage payoff funds. I personally know folks doing this through part-time bookkeeping, getting a stand at the local farmers market or even doing some cake decorating on the side. As well, an increasing number of homeowners are using their own homes to generate side income, either renting out rooms or floors on an ongoing basis, or just for a couple of nights here and there on sites like Airbnb and VRBO.

3. The right to HOA sanity. While the vast majority of homeowner associations (HOAs) are functional and smooth, the fact is that many have at least the occasional personality or financial drama. The spectre of rapidly rising dues, inane restrictions on minutiae like the color of your window coverings and scary “surprise” special assessments for unbudgeted property repairs have made many a homebuyer simply refuse to even look at properties that belong to HOAs.

It would be naive and inaccurate to suggest that you can 100 percent bulletproof your HOA experience from these sorts of potential potholes, but there are a number of rights you can exercise to minimize their likelihood of happening.

First, exercise the right — really, the responsibility — to spot red flags of impending HOA dramas before you even close escrow, by truly reading all the HOA disclosures you receive, no matter how mind-numbingly long and boring they might seem. If you see that many homeowners are behind on their dues or that the HOA’s budgets don’t seem to include plans for reroofing buildings, replacing windows or making similar repairs to the common areas over time, be concerned.

And don’t forget the seemingly fluffy newsletters or the seemingly boilerplate board meeting minutes: That’s often where talk of neighbor disputes and proposed dues hikes and special assessments pop up first.

Once you’re part of the HOA, you have even more of a duty-slash-power to participate in it, if you want to do your part to avoid problems. Attending board meetings or even becoming a member of the board is not overkill if you want to have a hand in choosing the accountants, building managers and contractors who will have such a huge impact on your experience as a member of an HOA.

Getting into the real estate game…

Homeownership still a goal of young adults

Mary Umberger | Chicago Times | November 1, 2012 | link
Homeownership still young adults' goalA new survey from a major real estate company contends that 18- to 35-year-olds like the idea of owning homes, and that they’ve learned a thing or two from watching their parents struggle with the housing market. (Bryabn Snyder/ Reuters photo / May 18, 2010)

Among the many aftereffects of the popped housing bubble is the perception that a generation of young adults has been spooked into doubting that they’ll ever own a home — or even aspire to own one.

Not true, says a new survey from a major real estate company, which contends that 18- to 35-year-olds do indeed like the idea of owning homes, and they’ve learned a thing or two from watching their parents struggle with the housing market.

And by the way, that young adult child of yours, the one who has moved back home and established residence in your basement? He’s probably not a slacker — he just may be acting “strategically,” said Sherry Chris, president and CEO of the Better Homes & Gardens real estate brand. We talked about what her company gleaned about 20- and 30-somethings (in edited form):

Q: Why did your company recently survey a broad group of young adults, generally known as Generation X and Generation Y?

A: When you look at nationwide demographics, about a third of the population is baby boomers — that’s my generation. We’ve driven the economy for 30 years, and we’re starting to slow down our buying of real estate.

Another third of the population is echo boomers, which are a combination of Generations X and Y, and they’ll drive the economy for the next 30 years. It was important to find out what’s on their minds, because there’s been a lot of chatter about how they’re going to remain renters and don’t have a clue about home ownership. It was important for us to get this firsthand.

Q: So, are they gun-shy about real estate? What did they tell you?

A: What we found was the opposite of all the chatter and noise. This group of young adults is very much in tune with owning real estate. Their values are similar to their parents’. They don’t have any feeling of entitlement. They’re hard-working, and homeownership is important to them.

Nearly all of them said they were willing to adjust their lifestyles to save for a home. Sixty-two percent said they’d eat out less. Forty percent said they’d work a second job. And 23 percent said they’d move back home with their parents to save money — they’re being strategic about saving money to own a home.

They also said that all of the media coverage of the housing crisis has taught them the importance of doing their research and planning, and they think they’re more knowledgeable about the process than their parents were at their age. But they want to be ready to own — 69 percent said that someone is ready to buy if they can maintain their lifestyle (while owning), and 61 percent agreed that the “readiness indicator” is if they have a secure job.

I think this group is more cautious and conservative than we thought.

Q: Of course, confidence in the job market is no small indicator these days, which I think might slow their entry into the buying market, even if they want to buy. Then there’s the evidence of huge amounts of student debt they’re likely to be carrying. What did they say about student debt?

A: We didn’t get into that. Our survey was mainly to get the lay of the land as far as the Gen X and Gen Y potential buyers were concerned. We didn’t take a deeper dive than that.

I will say that earlier this year, we surveyed baby boomers to see if they had lent money for a down payment for their children or would do that. The results were pretty positive. There’s money available for these young people.

Q: What would you have done if young adults had said, “No, thanks, I think I’ll remain a renter”?

A: Well, as an industry and certainly as a brand, we’d have to step up our campaign to show young buyers the importance of real estate as a long-term investment and lifestyle.

On a related note, something else also drove us to do this survey: the big disconnect in the average age of a first-time buyer (36), versus the average age of a real estate agent (56). This younger generation of buyers’ habits are different — they’re comfortable using technology, especially mobile devices, to buy and track everything, and agents need to learn this.

They don’t go to a restaurant unless they go to Yelp.com (an online service for consumers to post their opinions about places to eat, shop, etc.) first.

One of our agents in California is a great example of this. She’s 36, and she gets one business lead a day from Yelp. Rather than asking clients to send her letters of recommendation, she asks them to post comments (about her performance) on Yelp. That’s a pretty powerful example (of how agents need to be changing).

Are Sellers back?

Is a Sellers’ Market Emerging in California?

Jann Swanson | Mortgage News Daily | Nov 1 2012 | link

A sellers’ market appears to be emerging in some areas in California.  The California Association of Realtors® (C.A.R.) said Thursday that favorable home prices and record-low interest rates are making the market competitive to the point that nearly six of ten houses are receiving multiple offers.   C.A.R. made the comments as it released results of its 2012 Annual Housing Market Survey.

Fifty-seven percent of home sales featured multiple offers in 2012, the highest in at least the past 12 years.  Each home that received a multiple officer received an average of 4.2 compared to 3.5 offers in 2011.  Lower priced homes and distressed properties – bank-owned real estate (REO) and short sales – had more multiple offers than market sales, seven out of ten compared to one-half.

Competition has led to higher prices and 41 percent of homes sold at the asking price, the highest portion since 2005 and up from a long-run average of 32 percent.  Homes also sold faster with market sales taking 32 days on average compared to 67 days in 2011 and REOs in 30 days compared with 50 days last year.  Short sales still take longer than other sales because of the complexity of the process but the number has been cut to 90 days from 141.

Nearly a third of all homebuyers paid with all cash in 2012 and 16 percent of buyers bought for investment purposes.  International buyers made up 5.8 percent of the buyers with the largest numbers coming from China, Canada, India, and Mexico.

Seventy-seven percent of buyers were purchasing a primary residence and 40 percent of those who were first-time buyers bought either an REO property or a short sale, down from 44.3 percent last year primarily because of a shortage of inventory in those categories.

Very few home buyers have a second mortgage, probably reflecting tighter lending standards.  The share of home sales with second mortgages has dropped from 43.4 percent in 2006 to 1.8 percent in 2012.

“Well-qualified buyers are recognizing the once-in-a-generation opportunity to purchase a home in California and are jumping into the market,” said C.A.R. President LeFrancis Arnold.  “However, the fierce market conditions have forced many buyers to compete with all-cash offers and investors, setting off multiple offers and bidding wars, making it even more difficult for first-time buyers to become homeowners.”

C.A.R. has conducted its market survey since 1981, mailing it to a random sample of 15,000 Realtors throughout the state.  This survey seeks information about the Realtor’s most recent sales transaction that closed in the second quarter of 2012.

Finished in five?

Credit unions push five-year mortgages

Lew Sichelman | United Feature Syndicate |November 1, 2012 | link
    (Image Source photo / October 15, 2012)

Mortgage makers have always been a creative lot. But these days, credit unions seem to have supplanted traditional lenders as the most inventive.

Banks and mortgage companies are pretty much operating with one hand tied behind their back while they wait for regulators to lay down the law under the latest — and much more restrictive — legislation. But not credit unions, says Ed Roberts of the trade publication Credit Union Journal.

These not-for-profit institutions, which are owned and controlled by their members, had “much lower deficiency ratios” than banks during the mortgage meltdown, says Roberts. So they are “much more willing to experiment.”

One of the most intriguing new products is a five-year, fixed-rate mortgage being offered by the National Institutes of Health Federal Credit Union, which serves biomedical and health-care professionals in Maryland, Virginia, West Virginia and the District of Columbia.

“We call it our Goodbye Mortgage because it’s perfect for our baby boomer members who want to get out of debt before they retire,” says NIHFCU President Juli Anne Callis.

Say you’re nearing the point when you’re ready to slow down and enjoy the fruits of your labor, but you have a 10- or 12-year “tail” left on your current home loan. The loan is not throwing off the interest write-offs it used to, but you don’t have enough cash lying around to pay it off.

Consider refinancing into a five-year, “see-ya” loan like the one offered by the NIH credit union. At today’s record low interest rates, you might be able to cut the remaining term in half while paying no more than you were under your original loan.

Get out of debt

Even if the payment is somewhat higher, Callis says, her members are going for it. They are at the stage in their lives when they have the financial wherewithal to pay a little more each month in order to be out of debt sooner rather than later.

“‘How can we get out of debt by the time we retire?’ is a constant theme we hear from our members,” Callis says.

But the Goodbye Mortgage doesn’t appeal only to empty nesters. Parents who want to dump their mortgage debt by the time their children reach college age also see the value of refinancing into a five-year loan.

Younger buyers who don’t want to load up on debt are giving the loan a hard look, Callis says. And there’s interest, too, among folks who want to pay off their loan on their primary residence sooner so they can buy a vacation home.

Shorter-term loans have always been available in the mortgage supermarket. While most people know about 15-year loans, few realize that lenders will sometimes go as short as 10 or even eight years. But five-year loans? They’re practically unheard of.

What makes a five-year loan work, of course, is today’s rock-bottom rates. Say you are on the back end of a 30-year, fixed-rate loan you took out 20 years ago at 7 percent. If you borrowed $200,000, your payment is $1,330.60, and your current balance is $144,602.

Roll that into a five-year loan at 2.5 percent and your payment would jump $703, to $2,033.88. But now you have a lot more discretionary income than you did 20 years ago, and if you throw that against your mortgage, you’d be debt-free in half the time.

“As long as you are in a position where the higher monthly payment is not going to affect your lifestyle, the Goodbye Mortgage works really well,” says Mark Lawson, a NIHFCU loan officer.

Adjustable rate

Other credit unions are offering five-year adjustable-rate mortgages — but with a twist. Whereas the typical five-year ARM resets annually after the initial five-year fixed period, the 5-5 adjustables offered by Affinity Federal in New Jersey and Alliance Credit Union in San Jose, Calif., and Wilmington, N.C., are 30-year loans that adjust only after every fifth year.

“For the past four years or so, it’s been all about the 30-year fixed-rate mortgage. Adjustables had fallen off the map,” says Jim Delyea of Alliance, which serves as a credit union for about 200 companies. “So we thought it was time to reintroduce it. It’s almost like a new concept, it’s been off the table for so long.”

Both institutions are targeting their 5-5 ARM toward buyers who know they won’t be staying in their homes for long periods, whose jobs dictate that they be able to move every seven to 10 years. It’s more secure than a typical 5-1 ARM, says Delyea.

“You’ll enjoy five years of low, locked-in payments, then an adjustment only every five years after that,” the Alliance vice president says. “It’s the perfect mix.”

ARMs don’t have a particularly great reputation, largely because rates can fluctuate so widely that borrowers could be hit with unexpectedly higher payments. But with a 5-5 ARM, even borrowers with longer-term horizons can anticipate what is coming and budget for it, says Affinity’s Elizabeth McLaughlin.

At Affinity, New Jersey’s largest credit union serving more than 2,000 businesses and organizations, the 5-5 ARM comes with a 3 percentage point cap at the first adjustment and a 2-point cap on subsequent resets. Over the life of the loan, the rate can rise by no more than 6 points.

These built-in protections are even better with Alliance’s loan, which has 2 percentage point caps on each adjustment and a 5-point maximum over the 30-year term.

And, of course, if market rates should fall sometime over the life of the 5-5 ARM, there’s always the possibility your rate could slide right along with them.

The product “is a good example of the financial industry finding better ways to execute a worthwhile concept rather than simply tossing it out entirely because there were problems associated with it,” Alliance says on its website.

“Consumers did have problems with ARMs, but it didn’t make sense to lock everyone into fixed-rate mortgages when ARMs could benefit a lot of homebuyers if they were merely structured a little differently to protect against high risks and extremes.”

Welcome the West back…

Western U.S. Showing Strong Home Price Recovery in FHFA Report

Jann Swanson | Mortgage News Daily | Oct 24 2012 | link

Home prices have increased 4.7 percent over the past 12 months according to information released late Tuesday by the Federal Housing Finance Agency (FHFA).  The Agency’s House Price Index (HPI) for August was up 0.7 percent from July but the original estimate for July was revised down from a 0.2 percent increase to 0.1 percent.  Prices have now returned to the level of June 2004 and are 15.9 percent below the peak in prices reached in April 2007.

Monthly price changes varied widely across the nine census divisions, ranging from -0.5 percent in the East south Central division (Kentucky, Tennessee, Mississippi, Alabama) which was the only division to post a negative change, to +3.0 in the Pacific division (Hawaii, Alaska, Washington, Oregon, California).

All nine divisions are positive for the year while in August 2011all were down on an annual basis. Several divisions are showing dramatic increases.  The Mountain division (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico) which was particularly hard-hit by the housing crisis is now up 11.4 percent year-over-year and the Pacific division has increased by 8.1 percent.

The HPI is derived from the purchase price of houses financed through loans owned or guaranteed by Fannie Mae or Freddie Mac.