Home Price Growth Continues to Slow on OFHEO Index
One of the most closely watched measures of U.S. home price appreciation shows positive growth during the first quarter of 2007, although housing analysts, including NAHB Chief Economist David Seiders, are expecting prices to register a decline this year nationwide.
Released on May 31, the House Price Index (HPI) of the Office of Federal Housing Enterprise Oversight (OFHEO) showed that home sale and refinancing prices were up 0.5% in the first quarter over the fourth quarter of 2006.
Prices in the first quarter of 2007 were 4.3% higher than they were in the same quarter of 2006, the index found.
“Although some forecasters expected to see a drop in the HPI, nationwide house prices continued to rise in the first quarter of 2007, albeit at the lowest rate in 20 years,” said OFHEO Director James Lockhart.
“As always, real estate prices are local, with seven states showing double-digit annual appreciation rates and seven with rates less than 2%,” he said. “Seven states, including Florida and California, also showed home price depreciation in the first quarter.”
Nationally, house prices over the 12-month period ending with the first quarter grew faster than the non-housing goods and services tracked by the Consumer Price Index, which rose 1.6% for the same period.
“Low interest rates and unemployment continue to prop up house prices in most markets,” said OFHEO Chief Economist Patrick Lawler. “Prices are rising slowly in most areas, however there are some exceptions. For the first time in seven years, two states — Massachusetts and Michigan — experienced four-quarter price declines.”
Among the results of the OFHEO home price report:
- The states with the greatest rates of home price appreciation between the first quarter of 2006 and the first quarter of 2007 were: Utah (17%), Idaho (12.3%), Wyoming (11.7%) and Washington (11.6%).
- The states with the lowest rates of appreciation for the period were: Michigan (-0.7%), Massachusetts (-0.6%), Nevada (0.6%), Ohio (0.8%) and New Hampshire (1.1%).
- The Metropolitan Statistical Areas (MSAs) with the greatest appreciation rates were: Wenatchee, Wash. (25.6%), Provo-Orem, Utah (19.7%) and Salt Lake City (19.1%).
- The MSAs with the lowest rates of appreciation for the year ending through the first quarter were: Punta Gorda, Fla. (-4.6%), Sacramento-Arden-Arcade-Roseville, Calif. (-4.4%) and Modesto, Calif. (-4.4%).
- Of the 285 cities on OFHEO’s list of MSAs, 237 experienced four-quarter appreciation, 46 had price declines and two saw no change in prices.
- The Mountain Census Division continued to have the strongest housing appreciation. The four states with the greatest four-quarter appreciation were all in that division.
- Of the 20 cities with the greatest four-quarter appreciation, five are in Washington. Only five of Washington’s 12 largest metropolitan areas saw four-quarter appreciation of less than 10%.
- Prices in the first quarter of this year fell in seven states: California, Florida, Maine, Massachusetts, Michigan, Nevada and West Virginia. However, OFHEO’s purchase-only index figures, which exclude refinancings, showed price declines over the quarter in 23 states.
- Thirteen of the 18 Florida cities on the OFHEO list experienced price declines between the fourth quarter of 2006 and the first quarter of 2007.
- Twenty-two of the 26 California cities on the OFHEO list saw price declines for the 12-month period running through the fourth quarter.
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