More evidence came out today suggesting that home prices have bottomed-out and are moving tentatively higher. The new data from the Federal Housing Finance Agency (FHFA) — covering the fourth quarter of 2012 — show upward momentum in prices both nationwide and here in Arkansas. As shown in the chart below, the FHFA “Purchase-Only Index” for Arkansas held relatively steady over the second half of the year, but ended the year about 2.3% higher than the fourth quarter of 2011. The corresponding measure for the U.S. continues to increase steadily, rising 5.5% over the course of 2012.
The FHFA home price indexes are constructed using sales price information from all mortgages processed by FannieMae and FreddieMac. In order to expand the coverage to include other mortgages, the FHFA has recently introduced an “Expanded Index” that also includes information from county recorder offices. The latest information from this data series presents an even clearer picture of recent house price appreciation. In the fourth quarter, the expanded index data shows prices up 1.4% in Arkansas and up 1.6% for the U.S. Compared to the fourth quarter of 2011, prices were up 5.7% in Arkansas and 5.5% nationwide.
In order to accumulate enough sales-price data to provide reliable indicators for metro-area home prices, the FHFA also constructs a set of “All Transactions” indexes that include information from actual home sales as well as refinancing appraisals. As detailed in the table below, home prices have recently been on the increase in almost all of the state’s metro areas.
There is one exception to the recent trend: Home prices in Hot Springs have continued to decline over the second half of 2012. It is notable, however, that the housing market in Hot Springs remained strong well after home prices began to decline nearly everywhere else in the nation. That is, patterns in house prices in Hot Springs appear to be lagging behind the state and national trends. As shown in the chart below, home prices in Hot Springs have fallen by about 4.4% since the beginning of 2007 — the same rate of decline as the statewide average.
The metro-area chart also shows a wide divergence over longer-term house-price changes. Prices in Fayetteville and Memphis remain well-below their previous peaks, while many of the metro areas have seen relatively little net change in prices over the past 5 to 6 years. At the other extreme, house prices in Texarkana were barely affected by the general decline in prices over the past several years.