That drop is actually the largest one in the history of the index, which extends back to 1975. The combination of foreclosures and a tightening credit market forced the average home price down, says OFHEO.
Another measure of the housing market, median home price, dropped 15% in 2008, according to the National Association of Realtors. The median price is that at which half of all single-family homes sold for more, and half sold for less. The median single family home sold for $175,400 in 2008, down from $180,300 in 2007. That is the biggest one-year drop since they started measuring median home sales prices in the '60s.
Just three years ago, during the housing boom of 2006, home prices were appreciating at their fastest rate in the last 28 years. In the second and third quarters of 2005, home prices were up 9.7% from the year before.
While both OFHEO and NAR home price numbers would have the same result on our scale, we're using the OFHEO numbers here. Returning to our 10-point scale, if we set a 6% decline in home prices equal to 0, and 9.7% equal to 10, we're clearly now at a...
Home Prices: 0