OFHEO first quarter purchase HPI dropped 1.7 percent from the fourth quarter

The OFHEO home price index (HPI) measures prices of houses in refinancing operations and purchase-only transactions. On a month over month basis the purchase-only figures were down 0.4 percent nationally, and 3.7 percent below the April 07 peak. Eight states posted quarterly price declines above 3 percent; two states — California and Nevada — saw prices fall more than 8 percent. However on a refinancing basis home prices were essentially flat compared to the same time last year. This divergence is interesting and some analysts call it a "smoking gun" that points towards an appraising practice of inflating home prices.

A look at the effect of appraisal data from refinance loans on the OFHEO HPI (right) shows that refinancing led the OFHEO HPI to significantly overshoot the purchase-only HPI during the housing boom, and that now refinancing activity is leading the HPI to undershoot purchase-only transactions during the bust.

“I’d call that [graph] a smoking gun,” said one MBS analyst, who asked that his name not be used. “Appraisers were inflating home values on refis during the boom, enabling the home ATM, and now they’re faced with trying to keep homeowners in their home in many cases.”

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On a related note S&P reports today that subprime delinquencies continue to climb in April.

At the end of April, delinquencies among 2005 vintage loans reached 36.8 percent, an increase of 2 percent from the previous month. Delinquent loans from 2006 totaled 37.1 percent, a 4 percent jump from March. About 25.9 percent of loans from 2007 were delinquent at the end of April, a 6 percent increase from a month earlier.

Loans from 2007 continue to be the worst-performing of the bunch, S&P said in a statement. After 12 months, cumulative losses in 2007 represent 0.49 percent of the original aggregate size of securities. After a similar period, 2006 vintage loans cumulative losses were 0.29 percent.
(emphasize added to keep it in perspective)



source: Home Purchase Prices Fall At Record Pace; Refis Tell Another Story
By PAUL JACKSON, HW
http://www.housingwire.com/2008/05/22/home-purchase-prices-fall-at-record-pace-refis-tell-another-story/

source: S&P: Subprime delinquencies continue to climb
AP, Thursday May 22, 11:28 am ET
http://biz.yahoo.com/ap/080522/s_p_delinquencies.html