OFHEO says home values rose in January??

The Office of Federal Housing Enterprise Oversight released its January home price data. According to the report:

U.S. home prices rose 1.7 percent on a seasonally-adjusted basis from December to January, according to the Federal Housing Finance Agency’s monthly House Price Index. December’s previously reported 0.1 percent increase was revised to a 0.2 percent decline. For the 12 months ending in January, U.S. prices fell 6.3 percent. The U.S. index is 9.6 percent below its April 2007 peak.

What a cheery report!

Not really. This is unlikely to turn into a trend. The OFHEO index tracks home values on mortgages that were guaranteed or funded by Fannie Mae and Freddie Mac. Therefore, it is missing the entire subprime mortgage market, and lots of falling home values. Second, OFHEO was very careful to say the following: the surge is primarily in two areas - East North Central and South Atlantic - and "estimation imprecision associated with the January estimate is relatively large and subsequent revisions to the monthly figure could be significant".

Oh well, at the very minimum it is nice to hear good news for a change, even though it may only be transitory. Because over the year, we are very much still in the red. The Case Shiller index will release next week.

Rebecca Wilder