Home Price Appreciation Continues Orderly Slowdown
The nation is in the midst of an orderly slowdown in home price appreciation, according to the Office of Housing Enterprise Oversight (OFHEO)’s House Price Index for this year’s third quarter, which was released on Nov. 30.
Nationally, home prices were 7.73% higher in the third quarter of 2006 than they were one year earlier, according to the report. Appreciation for the most recent quarter was 0.86%, or an annual rate of 3.45%.
“With U.S. house prices growing less than 1% during the third quarter, it provides more evidence that the long-forecasted national deceleration in house prices is occurring,” said James B. Lockhart, director of OFHEO. “Given the five-year appreciation prior to this quarter of 56.8%, the slowdown is not unexpected.”
Lockhart added that “there are still some areas where appreciation rates remain very high, but now they are the exception rather than the norm.”
Year-over-year house price appreciation reached a peak of 13.9% in last year’s second quarter.
Even with the deceleration, house prices grew faster over the past year than prices of non-housing goods and services, which increased 3.1% in the Consumer Price Index.
The third-quarter findings found variations in different parts of the country:
- Five states — New York, Rhode Island, Michigan, New Hampshire and Massachusetts — saw price declines from the second to the third quarter of this year.
- Appreciation remains at or near record-setting rates in areas affected by Hurricane Katrina. Baton Rouge, La.; Gulfport-Biloxi., Miss; and Mobile, Ala. all had their highest four-quarter price growth ever, with rates of 14.1%, 23.3% and 17.5%, respectively.
- One-year price appreciation was highest in Idaho (17.52%), followed by Utah (17.41%), Oregon (16.90%), Arizona (16.37%) and Washington (16.35%).
- The slowest four-quarter appreciation rates were in Michigan (-0.55%), Ohio (1.02%), Massachusetts (1.11%), Indiana (2.33%) and Nebraska (3.22%).
- Fifteen of the 25 cities in California tracked by the OFHEO index registered price declines from the second quarter to the third quarter.
“House prices continued to rise through the third quarter in most of the country,” Lawler said. “The transition from sizzling markets to normal or weak markets has been orderly so far, and recent drops in interest rates lessen the likelihood that precipitous changes will occur.”
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NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into the middle of next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.