Rising prices wane, but it depends on where you live
Kay Anderson -- Furniture Today, November 6, 2006
High Point — U.S. home prices have appreciated 8.3% from a year ago, and at a 4.9% annual rate during the second quarter, after controlling for the distorting effects of mortgage refinance activity, according to the Office of Federal Housing Enterprise Oversight.
The general level of home prices soared 56% from spring 2001 to spring 2006. But over the last year the rate has slowed dramatically.
Patrick J. Lawler, associate director and chief economist of the office, told U.S. Senate subcommittees in September the sharpest decelerations have come in some of the most superheated markets, including Arizona, Nevada, California, Hawaii, the District of Columbia, Delaware, Maryland and Virginia.
Nationally, prices rose about 1.2% in 2006's second quarter, compared with a rise of about 3.6 % in the second quarter of 2005. The decline in the quarterly rate over the past year is the sharpest since the beginning of OFHEO's House Price Index in 1975.
Among the key findings from the most recent HPI release:
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All states show four-quarter appreciation, but five Midwestern and New England states had small price decreases in the second quarter.
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Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina just over one year ago, Louisiana and Mississippi. Four-quarter appreciation rates were well above the national average in several cities in those states, including New Orleans-Metairie-Kenner, Gulfport-Biloxi, Baton Rouge, and Pascagoula.
Gulfport-Biloxi and Pascagoula logged their highest appreciation rates since the beginning of the HPI. -
The South Atlantic Census Division, including Florida, Delaware, the District of Columbia, Virginia and Maryland, experienced its most significant price deceleration since at least the early 1980s. Its four-quarter appreciation rate fell from 17.43% to 13.74%.
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New England's four-quarter appreciation rate fell from 8.71% to 5.68%. While appreciation rates in Massachusetts were consistently amid the 10 highest between mid-1997 and mid-2003, its four-quarter appreciation rate now ranks 48th among the states and the District of Columbia.
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Despite a nine percentage point decline in its four-quarter appreciation rate, Arizona's housing market still exhibits the highest appreciation rate among the 50 states. Prices were up roughly 24% compared with the 2005 second quarter but grew only 2.94% in the most recent quarter.
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While the 20 Metropolitan Statistical Areas with the highest appreciation included nine cities in Florida, the representation of other states continues to increase. MSAs in North Carolina, South Carolina and Washington state have now entered the list of fastest-appreciating markets.
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Michigan had the greatest numbers of price decreases among ranked MSAs. Thirteen of Michigan's 16 ranked metro areas exhibited quarterly price decreases.
Housing markets in New England and the Midwest are showing some of the most significant regional weakness.
The relatively anemic New England market has been cooling for the past two years. While Massachusetts, New Hampshire and Maine saw some of the largest gains in the nation in the late 1990s and early 2000s, rates of price increase have dropped sharply since. OFHEO data suggest that prices in those states were virtually unchanged in the second quarter of this year.
