Home sales and house prices jumped in the second quarter of 2005, according to an index by mortgage giant Freddie Mac.
Freddie Mac announced today that its quarterly national Conventional Mortgage Home Price Index rose 15 percent in the second quarter of 2005 on an annualized basis, up from a revised first quarter 2005 annualized rate of 10.5 percent and a fourth quarter 2004 annualized rate of 9.8 percent.
“The steady decline of fixed mortgage rates during the second quarter helped to propel home sales higher and drive up house prices,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“According to the Primary Mortgage Market Survey, the weekly average rate for 30-year fixed-rate mortgages fell from a high of 6.04 percent the week of March 31 to a low of 5.53 percent the week of June 30. Home sales in the second quarter soared to an annualized record level of 7.62 million units.”
The Conventional Mortgage Home Price Index continues to show strong growth primarily along the coasts, Freddie Mac said. These are areas where populations are growing rapidly, job growth is strong and land scarcity is pushing up the cost of housing, the mortgage giant said.
“Home sales and housing starts are still expected to set a new record this year,” said Nothaft. “The devastating effects of Hurricane Katrina will likely drive up costs of construction materials once the rebuilding effort gets underway and may slow deliveries of new homes in other areas of the country as resources are reallocated to Louisiana, Mississippi and other areas affected by the storm.”
“It is too soon to know the full impact on the economy from the storm. Home sales in areas not affected by Hurricane Katrina should remain strong and support continued home-price appreciation, especially since interest rates have fallen in recent weeks,” Nothaft said.
“Prior experience in Florida shows that home prices in hurricane disaster areas fall temporarily and then recover. We hope that will be the case here,” added Nothaft.
Nationally, home values increased 13.2 percent on an annual basis, from the second quarter of 2004 through the second quarter of 2005. For the ninth consecutive quarter, the Pacific states led the nation in annual house-price appreciation, growing at a rate of 21.1 percent, Freddie Mac said.
And once again the South Atlantic states were second, with a growth rate of 17.3 percent, followed – again – by the Middle Atlantic states, which grew at a slightly slower pace of 15.8 percent for the year. The Mountain states came next with growth at an annual appreciation rate of 15.4 percent, according to Freddie Mac.
The New England states followed the Mountain states with an annual home-price growth rate of 13.7 percent. After the New England states came the West North Central states, which experienced an increase of 7.9 percent. The East North Central states saw an increase of 7 percent. Finally, the East South Central states had gains of 6.8 percent, and the West South Central states again had the slowest annual appreciation of 5.1 percent annually, Freddie Mac said.
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