U.S. home prices fell a seasonally-adjusted 1.7% in Q1 2008 -- the largest quarterly price decline in the 17-year data history of the U.S. Government's Office of Federal Housing Enterprise Oversight, government officials announced Thursday. (pdf)

Prices for single-family homes declined in 43 states, with hard-hit states California, Florida, and Nevada recording drops of 10.6%, 10.3%, and 8.1%, respectively, OFHEO said.

Prices nationally declined 1.4% in Q4 2007. OFHEO's report does not list sales prices, only percentage changes.

On the bright side, Wyoming, Utah, Montana, and Texas recorded the highest gains, of 6.3%, 5.6%, 4.9%, and 4.7%, respectively.

U.S. housing market worsens

Economist David H. Wang told BloggingStocks Thursday the OFHEO data, while not as comprehensive as U.S. Commerce Department housing data, nevertheless does not bode well for home sellers.

AP reports that Countrywide Financial Corp (NYSE: CFC) lost $893 million in the first quarter. That $1.60 a share loss was not exactly what analysts had forecast -- they were looking for a profit of two cents a share.

Meanwhile the LA Times reports that Countrywide CEO Angelo Mozilo took in $10.8 million and cashed out $121.5 million in stock gains as his company got hammered by losses on sub-prime loans in 2007. Mozilo also enjoyed perks worth $176,513, including $44,454 in rides on the company's jet; $23,755 in automobile use; $8,581 in country club dues; and $31,238 in company-paid tax and investment advice. Mozilo faces an informal U.S. inquiry into his stock sales.

And Countrywide's financial condition is deteriorating fast. It set aside a $1.5 billion reserve to cover loan up 62% from $925 million in the fourth quarter of 2007. Moreover charge-offs totaled $606 million during the first quarter. Fortunately, Countrywide has an exit strategy. In January, Countrywide agreed to sell itself to Bank of America (NYSE: BAC) for about $4 billion in stock. The question is whether Bank of America will pull out of the deal now that it sees the rising costs it will incur if it moves forward. Since Countrywide trades 15% below that takeout price, the market has its doubts.

Investors don't seem happy with today's announcement -- the stock was down 5% in premarket trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

The $150 billion fiscal stimulus package that's winding its way through the U.S. Congress will not represent a panacea for the U.S.'s economic ills, an economist argued, but it will represent modest good news for one segment -- the beleaguered housing sector.

The fiscal stimulus bill currently under discussion in the U.S. Senate calls for raising Fannie Mae and Freddie Mac's conforming loan limit to $729,750 through 2008 from the current $417,000.

Conforming loans are conventional, fixed-rate mortgages for good credit borrowers that banks make that are eligible for purchase by Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). When Freddie and Fannie purchase these loans from banks, it "frees-up" money that the banks can use to grant mortgages to future borrowers, thus expanding the pool of funds available for mortgages.

Economist Steve Affinito told BloggingStocks Thursday that while it's important to underscore that the higher conforming loan ceiling will not eliminate the U.S. housing sector's recession, it is "a critical, essential step in the right direction," in his interpretation.

Mortgage application volume increased 7.5% for the week ended Jan. 25, 2008, the Mortgage Bankers Association's announced Wednesday.

The MBA's application index rose to 1,054.9 from 981.5 the previous week. The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

Refinance volume pushed the index higher. Refinance application volume increased 22.1%, while purchase volume tumbled 17.7%. Refinance applications accounted for 73% of total applications.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 1,054.9 means mortgage application activity is 10.549 times higher than it was when the MBA began tracking the data.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.

Consumer confidence declined to an all-time low in early January 2008, according to one measure, as concerns about jobs, energy prices, and home foreclosures weighed on the public's outlook for the economy and their personal finances, The Associated Press reported Friday.

The RBC Cash Index fell to 56.3 in early January 2008 from 65.9 in December 2007, RBC said in a statement. The January stat is the lowest reading since the index's inception in 2002, RBC announced. One year ago, in January 2007, the idex stood at a healthy 95.3.

Economic headwinds weigh

Economist David H Wang told BloggingStocks Friday the data reflects consumer awareness of sub-par U.S. economic fundamentals, and the uncertain outlook for the nation in 2008.

The number of mortgage delinquencies rose to a 20-year high in Q3 as borrowers increasingly found it difficult to make payments within the 30-day grace period, the Mortgage Bankers Association announced Thursday.

The percent of home loans with payments more than 30 days late rose to seasonally-adjusted 5.59%, the MBA announced -- the highest level since 1986. The group's survey began in 1972.

Telling stat

The delinquency statistic suggests that the housing correction "is far from over," according to economist Steve Affinito.

"It's not even the beginning of the end," Affinito told BloggingStocks on Thursday. "Generally during a housing slump, what you see first is a rise in unsold homes, and then a rise in delinquencies, mostly from homeowners who did not sell or could not refinance."

There are those economic statistics that on second analysis don't look nearly as dire as on the first, instant analysis during the trading day.

Then there are those economic statistics that look just as bad.

Put Tuesday's new home sales in the latter category.

The U.S. Commerce Department announced Tuesday that new home sales fell 1.6% to a seasonally-adjusted annual rate of 915,000 units in May, the slowest pace in 4 years and below the 924,000-unit rate analysts had forecast.

Further, the median price of a new home sold in April dropped to $226,100, down 0.9% from a year ago.