National home prices show improvement over 2008

National housing prices fell 10.2 percent in April compared to a year ago, representing the smallest year-overyear decline recorded in 2009, according to newly released data from First American CoreLogic and its LoanPerformance Home Price Index. April's decline was a 0.5-percent improvement over the 10.7 percent decline in March.

In Cape Coral-Fort Myers, home prices have decreased 27.01 percent in April compared to a year ago. In March 2009, Cape Coral-Fort Myers showed a decrease of 26.66 percent compared to one year prior.

The rate of national price declines peaked at 11.9 percent in January 2009 and has since been trending down: April's rate is the lowest year to date and the May preview data suggests further improvements in the rate of decline, perhaps back to the single digits.

The improvement in home price declines has been especially noticeable when adjusting for inflation. The differences between nominal and real (inflation adjusted) home price changes are rapidly widening due to the deceleration of inflation in 2008 and the recent outright deflation as of May 2009. Real home price declines peaked at 18.1 percent in August of 2008. In contrast, April 2009 data puts the real price decline at 8.4 percent, a nearly 10 percentage-point improvement in real home prices since last summer, thanks to a slowing of the nominal price decline and deflation.

The shifts among the top five states have continued this month with Nevada (26.1 percent) remaining the top-ranked state for annual price depreciation, but Florida (23.2 percent) supplanted California and became the second-ranked state for price depreciation. After being the top-ranked state for 20 consecutive months — May 2007 and December 2008 — California's (22.7 percent) home price declines have improved, putting California into third place in April 2009 ahead of fourth-ranked Arizona (20.5 percent). The rapid deteriorations of home prices in Illinois (17.4 percent) put that state in fifth place for the first time during the downturn.

Since U.S. home prices peaked in July 2006, national home prices have declined 21.2 percent on a cumulative basis and are currently down to the lowest price level in more than five years.

"There is still a great deal of uncertainty with the housing market and the economy in general. But the rate of change in home price declines is beginning to show signs of not only a bottoming, but an improvement in both nominal and real terms, which is the more important indicator because real prices adjust for the distortions caused by inflation or deflation," said Mark Fleming, chief economist for First American CoreLogic.

Home Loan Performance Index (percent change)