Home prices grew 0.86% for the quarter (3.45% annualized) nationally, compared to an upwardly revised 1.3% (5.1% annualized) in the second quarter, according to the Office of Federal Housing Enterprise Oversight's quarterly survey. Compared to a year ago, home prices were up 7.73% in the third quarter, down from 10.06% reported in the second quarter, and down from a high of 13.9% reported for 2Q05.
For the quarter, five states recorded negative home price growth: New York (-0.33%), Rhode Island (-0.37%), New Hampshire (-0.14%), Massachusetts (-0.49%), and Michigan (-0.52%).
The top five states showing the strongest price growth for the third quarter were Utah (4.70%), Wyoming (4.61%), Washington (3.14%), Idaho (3.00%) and Oregon (2.85%).
Looking at one-year appreciation, Idaho was ranked number one with 17.52% growth, up from the third position in quarter two and displacing Arizona, which fell to fourth with 16.37% appreciation. Utah moved to second from 10th in the second quarter with one-year appreciation of 17.41%, and Oregon placed at number three, up one from the second quarter, with 16.90% appreciation. Florida, which had ranked second in quarter two, fell to sixth with 15.11% one-year appreciation. Ohio and Michigan remained at 50 and 51 with appreciation of 1.02% and -0.55%, respectively.
Regarding California, the OFHEO noted that quarterly price declines occurred in more than half of the cities in California. In addition, the agency said that 15 of 25 California cities ranked as MSAs experienced price declines relative to the second quarter. Overall, based on one-year appreciation, California was ranked 16th at 10.16%. In the second quarter, they were at 11 with 14.35% appreciation.
"House prices continued to rise through the third quarter in most of the country, but generally at only low or moderate rates, " OFHEO Chief Economist Patrick 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."
RBS Greenwich Capital Chief Economist Stephen Stanley stated the market has been using the very simple assumption that home prices would be near flat in 2H06 and all of next year.
Generally, Stanley noted that the results of OFHEO's report point to a healthier home price trend than what market participants have assumed.
He noted that the quarter-to-quarter change turned out to a 3.45% annualized pace, dropping from 5.1% in the second quarter, 9.32% in the first quarter, and double digit gains in 2004 and 2005. "So the path of cooling is clear," Stanley added.
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