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Reason Foundation

Home Prices Continue Their Downward Slide

Anthony Randazzo
April 21, 2011, 3:20pm

The Federal Housing Finance Agency (FHFA) released its latest monthly house price index today, showing that national home prices declined 1.63% from January to February. Worse, housing prices dropped 5.74% from February 2010. And FHFA revised its January price decline down from a 0.3% decrease to a drop of 1%.

You can blame this on a lot of things, but the fact remains that despite the Fed's intervention trying to encourage the housing market through low interest rates and billions in federal subsidies to juice the housing market, prices remain on the decline from their peak in 2006.

You can see in the chart below, taken from today's updated FHFA numbers, that it looked like the housing market was beginning to recover at the end 2009. Changes month over month, and year over year were trending positive and the price index decline was leveling off. But it was largely due just to federal subsidies keeping the market from completely clearing out its toxicity. An extension of the First-time Homebuyers Credit in 2010 turned the tide temporarily, but since the tax credit expired the full decline has continued, even with QE2.

HPI Changes

See the full FHFA report here.

Case-Shiller numbers are scheduled to come out next Tuesday.


Anthony Randazzo is Director of Economic Research


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