Average U.S. home prices are putting on the brakes from recent years of rapid growth. House prices are still well above what they were a year ago, but a report released Thursday shows the rate of appreciation has declined from year-ago figures.

The average price of a home increased 12 percent year over year from the third quarter of 2004 through the third quarter of 2005, representing a two percentage point decline from the previous four-quarter appreciation rate of approximately 14 percent, according to figures released from OFHEO, the Office of Federal Housing Enterprise Oversight.

Appreciation for the most recent quarter was 2.86 percent, according to the quarterly report analyzing price trends.

“Appreciation rates in the third quarter were extremely strong, although some deceleration can be seen in a number of the faster-appreciating markets,” said OFHEO Chief Economist Patrick Lawler. “Price momentum in the Pacific and New England states, in particular, has pulled back.”

House prices grew more rapidly over the last year than did prices of non-housing goods and services reflected in the consumer price index. House prices rose 12 percent, while prices of other goods and services rose only 4.5 percent.

Appreciation rates in the Pacific Census Division fell from last quarter, but remain higher than in other areas. At slightly less than 16.9 percent, the four-quarter appreciation rate in the South Atlantic Division now trails appreciation in the Pacific by less than one-half a percentage point.

Other significant findings in the report:

–Price growth in Arizona continues to accelerate, with a one-year appreciation rate of 30 percent, the largest of any state by a wide margin.

–Florida became the second-fastest-appreciating state, with four-quarter appreciation of 25 percent and 11 of the 20 highest-ranked metropolitan statistical areas.

–Nevada’s four-quarter appreciation rate declined by more than 10 percentage points from the previous rate of 28.6 to 17.6 percent.

–Two states that continue to show noticeable house-price appreciation are Idaho and Utah. Idaho, with an appreciation rate of 15.1 percent on a four-quarter basis, is now ranked 12 among states, up from 20 in the previous report. With annual price growth of 11.4 percent, Utah’s ranking jumped to 22, compared with 31 in the previous report and last place in the fourth quarter of 2003.

–With a four-quarter appreciation rate of 34.4 percent, Phoenix-Mesa-Scottsdale, Ariz., topped the list of the fastest appreciating metropolitan areas for the first time since OFHEO began publishing its index in the fourth quarter of 1995. Last quarter’s top metro, Naples- Marco Island, Fla., dropped to number three.

–For the first time since the fourth quarter of 2003, the list of the top 20 metro areas having the highest appreciation does not contain any Nevada cities. Reno-Sparks, Nev., the fourth-ranked market last quarter is now 29 among the 265 ranked metro areas. Also, Las Vegas-Paradise, Nev., has fallen from 21 to 77, with four-quarter appreciation of 13.77 percent.

“Much of the recent run-up in mortgage rates occurred after the third quarter ended,” said Lawler. “To the extent that those increases may have affected prices, those effects will be evident in future quarters.”

Changes in the mix of data from refinancings and house purchase transactions can affect index results. This report includes an index that is calculated using only purchase price data.

The index shows an increase of 10.95 percent for the U.S. between the third quarter of 2004 and the third quarter of 2005.

In response to the recent hurricanes in the Gulf states, this report also includes an analysis of the effects of Hurricane Andrew in 1992.

OFHEO’s house-price index is based on data obtained from Fannie Mae and Freddie Mac from more than 30.7 million transaction pairs over the past 30 years.

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