U.S. home price appreciation in the first quarter of the year officially slowed down - to an 8.1% annual pace from 12.3% the previous quarter, according to the Office of Federal Housing Enterprise Oversight's quarterly home price index report, released June 1.
Appreciation for the first quarter alone was 2.03%, about one percentage point lower than the previous quarter, and what was the smallest quarterly price gain in two years.
Among the states, Arizona continued to experience the greatest pace of appreciation of any state - but even its price growth slowed to 3.8% from a 7.4% quarterly rate in the fourth quarter. And, for the first time since the fourth quarter of 2002, negative quarterly appreciation rates were recorded among some states. Iowa and South Dakota experienced the price declines. "These data show average housing prices still growing stronger than some might have expected," said OFHEO Acting Director James Lockhart. "They do indicate, however, that price growth is moderating in some parts of the country, particularly in areas where prices have been rising the most."
While some economists feel U.S. housing market prices could follow a steep decline, some are more hopeful for a soft landing. "Home price appreciation did indeed decelerate, as widely expected, but only from a 12.3% annualized clip to a still-healthy 8.1% pace. While this is the smallest quarterly price gain in two years, it is still pretty sizable," said Stephen Stanley, chief economist at RBS Greenwich Capital. Stanley added that the year-over-year growth rate "barely budged," from 13.3% in the fourth quarter to 12.5% at the end of the first.
The year-over-year growth rate in housing prices, at 12.5%, rose considerably faster than the prices of non-housing goods and services - which rose only 4.2%, according to the consumer price index.
Early estimates for the first quarter had indicated substantial downturns in a number of hot local real estate markets - leading many to speculate how far prices will fall, and how high losses in the price-sensitive subprime sector will reach. Annualized month-over-month home price appreciation in Bakersfield, Calif., at the end of the first quarter fell to negative 1.98% from 24.92% a year earlier, while Scottsdale, Ariz. fell to 15.3% from 33.5% and Miami, Miami Beach and Kendall, Fla. fell to 12.43% from 24.82%, according to monthly sales data tracked by research firm First American Real Estate Solutions.
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