Home-Price Growth In First Quarter Marked Slowest Rate In Decade

Thursday, May 31st 2007, 1:25 pm

By: News On 6

WASHINGTON (AP) _ The rate of increase in U.S. home prices remained slow in the first quarter of the year, marking the slowest growth pace in a decade and extending a trend that began last year.

Figures released Thursday by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, provided the latest indication of a modulated slowdown in the once-sizzling housing market.

Average home prices edged up 0.5 percent in the January-March period, compared with 2.2 percent in the first quarter of 2006, the report showed. House prices were 4.3 percent higher in the first quarter of this year than they were in the same quarter of 2006.

``Nationwide, house prices continued to rise in the first quarter of 2007, albeit at the lowest rate in 10 years,'' OFHEO Director James B. Lockhart said in a statement.

``As always, real estate prices are local,'' Lockhart noted. The data showed seven states posting double-digit rates of increase over the 12-month period: Utah, 17 percent; Idaho, 12.3 percent; Montana, 11.7 percent; Wyoming, 11.7 percent; Washington, 11.6 percent; New Mexico, 11.2 percent, and Oregon, 10.8 percent.

Seven other states, by contrast, had home-price depreciation in the first quarter: California, -0.8 percent; Nevada, -0.5 percent; Massachusetts, -0.5 percent; Florida, -0.3 percent; Michigan, -0.2 percent; West Virginia, -0.2 percent, and Maine, -0.1 percent.

Home prices still grew faster over the past year than prices of other goods and services reflected in the Consumer Price Index, which rose 1.6 percent, the agency said. Low interest and unemployment rates continued to buttress house prices in most areas of the country, it said.

But two states, Massachusetts and Michigan, had home-price declines over four consecutive quarters _ the first time in seven years that occurred, according to OFHEO.

The first-quarter figure is derived from an average of home prices in January, February and March.

A housing index released Tuesday by credit-rating agency Standard & Poor's showed U.S. home prices falling 1.4 percent in the first quarter compared with a year earlier, the first time since 1991 that prices marked a quarterly decline.

The sour housing market was a factor restraining overall economic activity in the first quarter. In a new reading on the gross domestic product, issued Thursday by the Commerce Department, the slowed growth rate of 0.6 percent for the quarter was the worst three-month showing in more than four years.

Investment in home building was cut by 15.4 percent, on an annualized basis, in the first quarter, according to the new government figures. However, that wasn't as deep a cut as the 17 percent annualized drop initially estimated. And it wasn't as severe as the 19.8 percent annualized drop seen in the final quarter of last year.