Home Price Appreciation Steady
Thursday, March 1st 2007, 9:37 pm
News On 6
WASHINGTON (AP) _ The rate of increase in U.S. home prices remained steady in the fourth quarter of 2006, extending the slowing trend that began earlier in the year, federal regulators reported Thursday.
The figures released by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, provided yet another indication of the slowdown in the once-booming housing market.
Average home prices rose 1.12 percent in the October-December period, compared with 3.03 percent in the fourth quarter of 2005, the report showed. Over the year, house prices increased by 5.9 percent _ a marked slowdown from the 13.2 percent jump in 2005. Still, the report noted, home prices continued to grow faster than prices of other goods and services.
``These data show that, on the whole, (home) prices are still rising, albeit at a much slower pace,'' OFHEO Director James B. Lockhart said in a statement. ``This suggests that house-price appreciation is, for now, more in line with historical norms.''
The agency said that in the second half of 2006, continued strength in the economy and declining interest rates for borrowers prevented a more severe fall in the housing market. In the fourth quarter, though sharper price drops occurred locally, ``no state had average price declines of as much as one percent,'' said OFHEO's chief economist, Patrick Lawler.
The fourth-quarter figure is derived from an average of home prices in October, November and December.
The Commerce Department reported Thursday that construction activity fell sharply in January as the housing industry continued to suffer. The weakness in construction was led by a 1.8 percent plunge in spending on home building _ the 10th consecutive fall in residential construction.
Sales of new homes plummeted by 16.6 percent in January from the previous month, the steepest decline since January 1994. As sales cooled, so did home prices. The median sales price of a new home _ where half sell for more and half for less _ dropped to $239,800 in January, down 2.1 percent from January 2006, the Commerce Department said Wednesday.
The OFHEO fourth-quarter report, based on data from Fannie Mae and Freddie Mac on repeat sales and refinancings of single-family homes, also found that:
_Home prices increased by the strongest rates from 2005's fourth quarter in Utah (17.6 percent), Wyoming (14.3 percent), Idaho (14 percent), Washington (13.7 percent) and Oregon (13.5 percent). The states with the lowest rates were Michigan (-0.4 percent), Massachusetts (0.5 percent), Ohio (1 percent), Indiana (2.3 percent) and Minnesota (2.5 percent).
_The metropolitan areas with the highest year-to-year rates of increase were Bend, Ore. (21.4 percent), Wenatchee, Wash. (20.9 percent) and Provo-Orem, Utah (19.9 percent). Those with the lowest were Kokomo, Ind. (-5.3 percent), Santa Barbara-Santa Maria-Goleta, Calif. (-4.2 percent) and Jackson, Mich. (-3.9 percent).
_California saw quarterly rates of increase that were negative in 21 of the 26 cities ranked as metropolitan areas.
_Nevada, which had the highest statewide rates of growth in the country two years ago, is now ranked 40th.
_Home prices in areas affected by Hurricane Katrina in Louisiana, Mississippi and Alabama showed double-digit increases in 2006, indicating that housing shortages continue.