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.

***

Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
The best event in real estate kicks off next week! Tickets are selling quickly.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription