NAR: Home Price Declines Vastly Outstripping Price Gains at the MSA Level

The NAR’s quarterly metro price survey was released Thursday, which found that 77 of 150 MSAs saw home prices drop during the fourth quarter on a year-over-year basis; 16 MSAs saw double-digit price drops, according the the report. Of course, that also means that 73 MSAs saw price gains; the NAR reported that 11 MSAs saw double digit price gains, and not surprisingly focused its press statement on the gains. “The healthiest housing markets today generally are moderately priced and are experiencing job growth and often population growth, which in turn is supporting strong price growth,” said NAR economist Lawrence Yun. “Most of the weakest markets have either experienced both job and population losses, or they are experiencing corrections following a prolonged period of rapid price growth.” The weakest markets also happen to be where the majority of the U.S. population lives. HW conducted a basic analysis of the population for those MSAs that reported double-digit price movements (16 down, 11 up). What we found was a stunning divergence in the size of affected populations: MSAs posting large annual price losses represented nearly ten times the population of MSAs posting large annual price gains. MSAs reporting double-digit annual gains during Q4 represented an aggregate population of 3.67 million, according to the most recently-available CBSA data provided by the Census department; meanwhile, MSAs reporting double-digit annual losses during Q4 represented an aggregate population of 30.16 million. Click here to download the complete analysis. The NAR led off its press release by asserting that “roughly half of metropolitan areas showed price gains in the fourth quarter of 2007.” It’s clear that the statement should not be taken to mean that half of the country’s homeowners are seeing price gains. Outside of pricing activity, the NAR’s state-by-state look at sales volume also found widespread evidence that the housing slump is national in scope; year-over-year sales volume declined in 46 states, and fourteen states saw sales declines reach above 20 percent. “With prior reports of national home sales declines, it is not surprising to see 14 states with declines in excess of 20 percent from a year ago,” Yun said.