The rate of home-price appreciation in the U.S. remained steady in the fourth quarter of 2006, extending a general trend of deceleration begun earlier in the year.
Home prices, based on repeat sales and refinancings, were 1.1 percent higher in the fourth quarter than they were in the third quarter of 2006, according to the Office of Federal Housing Enterprise Oversight’s latest survey. This is slightly above the revised growth estimate of 1 percent from the second to the third quarter.
Prices in the fourth quarter of 2006 were 5.9 percenthigher than they were in the same quarter in 2005.
Price appreciation in 2006 was substantially smaller than the tremendous price gains of recent years, which ranged from 7.4 percent in 2002 to 13.2 percent in 2005.
“These data show that, on the whole, prices are still rising, albeit at a much slower pace,” said OFHEO Director James B. Lockhart Lockhart. “This suggests that house-price appreciation is, for now, more in line with historical norms.”
House prices grew faster over the past year than did prices of nonhousing goods and services reflected in the Consumer Price Index. House prices rose 5.9 percent, while prices of other goods and services, excluding shelter, rose 0.9 percent.
“The continuing strength in the economy and decreasing interest rates for borrowers prevented a harder landing in housing markets during the second half of last year,” said OFHEO Chief Economist Patrick Lawler. “Last quarter, though sharper drops occurred locally, no state had average price declines of as much as 1 percent.”
The states with the greatest rates of appreciation between the fourth quarter of 2005 and the fourth quarter of 2006 were: 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 of appreciation for the same period were: Michigan (-0.4 percent), Massachusetts (0.5 percent), Ohio (1 percent), Indiana (2.3 percent) and Minnesota (2.5 percent).
The Metropolitan Statistical Areas with the greatest rates of appreciation between the fourth quarter of 2005 and the fourth quarter of 2006 were: Bend, Ore. (21.4 percent), Wenatchee, Wash. (20.9 percent) and Provo-Orem, Utah (19.9 percent). The MSAs with the lowest rates of appreciation for the same period were: Kokomo, Ind. (-5.3 percent), Santa Barbara-Santa Maria-Goleta, Calif. (-4.2 percent), and Jackson, Mich. (-3.9 percent).