Housing markets still struggling.

• Author: Rickard, Scott

National Housing Markets

Despite efforts by the federal government to increase home sales in 2010, the U.S. housing market continued to contract, with home sales declining by one-quarter. At the same time, the average number of homes offered for sale each month increased by one-half. For properties that did find buyers, estimates of the change in average and median sales prices ranged from a 3 percent drop to a small positive of 1 percent. Estimates of real estate valuation and debt-to-equity suggest that U.S. residential property owners lost another $1.7 trillion in value in 2010 (and a total of $9 trillion since the 2006 peak). And one in five homeowners with mortgages owes more on their residences than these homes are worth.

Of course, compared to the U.S. averages and totals, residents of different parts of the country witnessed different market dynamics. For example, prices fell by 16 percent in Atlanta while rising by nearly 10 percent in Washington, D.C.

Foreclosures were another important feature of the U.S. housing market. In mid-2010, on average, one in every 492 homes was in foreclosure. At the state level this varied from one in 99 homes for Nevada to one in 6,395 houses in North Dakota.

Nationwide, the residential construction market continues to shrink. In 2010, housing starts declined almost 6 percent year-over-year, and building permits fell 15 percent for the same time period. Single-family home construction remained weak, while there were some signs of improvements in the construction of multifamily or apartment units.

In the mortgage markets. 2010 was a year where 80 percent of the activity was in refinancing existing loan products, likely due to low mortgage interest rates. But, unlike just a few years ago, far fewer of these refinancing transactions involved withdrawing equity from the home along with changing the terms or interest rates.

Regional Housing Markets

For Montana and our region, state-level statistics are a little more encouraging (see Table 1). Using the Office of Federal Housing Enterprise Oversight Home Price Index (HPI), Montana's home prices were 3 percent lower in the third quarter of 2010 than they were one year earlier. To the east, the Dakotas experienced either price stability (South Dakota) or price increases (North Dakota). Our southern neighbors witnessed price declines of 3 percent (Colorado) and 4 percent (Wyoming). To the west, Idaho home prices have fallen nearly 10 percent. From their peak...