Freddie Mac Sees Home-Price Rise
NEW YORK (
) - Another bullish sign for the housing market emerged Tuesday, as
Freddie Mac
(FRE)
reported the first quarterly increase in home prices in two years.
The mortgage-financing agency said its index for the price of homes with conventional mortgages climbed 1.7% during the second quarter. Prices still dropped 6.7% from the year-ago period, but at a slower pace than the 8.5% annual drop registered in the previous quarter.
The data come on the heels of a report on Wednesday morning showing an increase in pending home sales, as well as data in previous weeks showing that existing- and new-home sales have also started to improve.
"The pickup in home price growth rates is consistent with other housing market indicators that show home sales and single-family construction up in the second quarter," Freddie Mac Chief Economist Frank Nothaft said in a statement. "The lowest mortgage rates in a half-century have pushed housing affordability to the highest level in at least 40 years, helping to encourage buying."
Freddie Mac's index, which includes only purchases rather than refinancings, showed increases across every region of the country. The Pacific region, which includes California, one of the states hardest hit by the real estate crisis, experienced a price increase of 3.2%. Other areas that include states with real estate troubles, like Florida's South Atlantic region and Nevada's Mountain region, saw prices rise a more muted 1.4% and 0.7%, respectively.
If the trend holds up, it stands to help Freddie and its sister entity
Fannie Mae
(FNM)
, as well as banks dealing with real-estate loans whose value has declined markedly through the financial crisis, such as
Bank of America
(BAC) - Get Report
,
Wells Fargo
(WFC) - Get Report
,
JPMorgan Chase
(JPM) - Get Report
and
Citigroup
(C) - Get Report
.
-- Written by Lauren Tara LaCapra in New York
.
