Average U.S. home prices increased 8 percent during 2003, and appreciation for the fourth quarter was 3.7 percent, or an annualized rate of 14.7 percent, according to figures released today from the Office of Federal Housing Enterprise Oversight’s House Price Index.

The appreciation shown in the fourth quarter HPI was more than two percentage points higher than the increase in the previous quarter, and the appreciation was geographically widespread. During the period, all but two states saw prices rise, and even states that had been lagging the nation as a whole experienced a substantial acceleration in house-price growth.

“The fourth quarter surge is particularly impressive right now because it comes on the heels of much more moderate increases earlier in the year,” said OFHEO Director Armando Falcon.

A stronger economy and continued low mortgage rates contributed to the growth in prices. “Rising incomes and borrowing costs below 6 percent extended a prolonged period of rapid house-price gains,” said Patrick Lawler, chief economist at OFHEO.

According to the HPI, 2003 marked the fourth consecutive year in which house prices had risen more than 7.5 percent on average across the country. The biggest price increases during the past year occurred in Rhode Island, California and the District of Columbia. The lowest price increases were in Utah, Texas and Colorado.

OFHEO’s House Price Index reflects price movements on a quarterly basis of sales or refinancings of single-family homes whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac.

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