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Home Price Gains Robust in 2005, OFHEO Finds
Amidst growing signs of a slowdown, average home price appreciation remained strong in last year’s fourth quarter, according to the Office of Federal Housing Enterprise Oversight's House Price Index released on March 1.
Average home prices increased by a robust 12.95% from the fourth quarter of 2004 to the final quarter of 2005, compared to 4.3% for all goods and services on the Consumer Price Index, according to the report.
Price appreciation for the fourth quarter was 2.86%, or an annualized pace of 11.4%, slower than the rate for the entire year.
The OFHEO index includes appraisal data from homes that are refinanced, “and when the data is limited only to homes that were purchased, prices last year rose at a somewhat slower pace of 10.81%,” said NAHB Chief Economist David Seiders. “When looking only at purchase transactions, the rate of home price appreciation peaked in last year’s second quarter and since then has clearly been moving down.”
High housing prices and rising mortgage interest rates are already beginning to cool down housing sales activity to more sustainable levels, Seiders said, and the momentum behind home values should slow further as the year progresses.
Among the significant findings in the latest House Price Index:
- Fourth-quarter appreciation rates were at record levels in 26 metropolitan areas, including Orlando-Kissimmee, Fla.; El Paso, Texas; and Myrtle Beach-Conway-North Myrtle Beach, S.C.
- Of the 275 metropolitan areas ranked by the index (379 are tracked), the Phoenix area experienced the sharpest one-year appreciation rate, 39.67%. It was followed by Naples-Marco Island, Fla., 39.89%; Cape Coral-Fort Myers, Fla., 36.19%; St. George, Utah, 35.27%; and Prescott, Ariz., 31.89%.
- At the bottom of the list of metro areas were: Burlington, N.C., declining by 1.16%; Bay City, Mich., 0.43%; Sioux City, Iowa, Neb. and S.D., 1.32%; Greeley, Colo., 1.72%; and Lafayette, Ind., 2.02%.
- By state, including the District of Columbia, the top five were Arizona, 34.90%; Florida, 26.83%; Hawaii, 23.85%; District of Columbia, 21.98%; and Maryland, 21.48%.
- The bottom five by state were: Michigan, 3.76%; Ohio, 4.03%; Nebraska, 4.25%; Indiana, 4.69%; and Kansas, 4.70%.
- Driven by price increases in Arizona, the Mountain Census Division (Idaho, Montana, Wyoming, Utah, Colorado, Arizona and New Mexico) became the fastest appreciating area of the country, at a rate of 18.79%, just edging out the Pacific division (Washington, Oregon and California), where home prices climbed 18.75%.
- The area with the slowest price growth continued to be the East North Central Division (Michigan, Wisconsin, Illinois, Indiana and Ohio), where prices rose 6.23%.
For rankings for metro markets, click here and go to pages 26-41 of the report.
Want to Know the Housing Starts Through 2014?
Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.
To learn more, visit www.housingeconomics.com.
Give Your Perspective on the New NAHB Economics Blog
Give your economic perspective on NAHB's new economics blog, “Seiders on Housing,” an informal Internet-based forum dealing with economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses.
 Attend the Spring Construction Forecast Conference in April
Plan to attend NAHB's Spring Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth look at the economic outlook for the housing industry.
For information or to register, visit www.nahb.org/cfc.
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