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Economy in Brief

Home Prices: Sporadic Regional Declines
by Tom Moeller September 5, 2006

The Office of Federal Housing Enterprise Oversight (OFHEO) reported that during 2Q '06, home prices rose 1.2% q/q and that it was the slowest gain since 4Q '99.

The OFHEO house price index is a geometric weighted average based on more than 26.5 million repeat transactions (purchase or refinance) over 29 years and 12,000 transactions annually.

Year to year, the 10.1% gain in prices nationwide also represented slower growth, the slowest in nearly two years.

The purchase only home price index rose just 1.2% (8.3% y/y), its slowest quarterly gain since 1997.

The Middle Atlantic (11.0% y/y) and the South Atlantic (13.7% y/y) regions of the country along with the Mountain (14.1% y/y) and the Pacific (14.1% y/y) regions continued to experience firm y/y home price gains, double & triple the rates of appreciation elsewhere in the country.

Slower growth in home prices y/y ranged across the country but prices declined 0.4% q/q in Massachusetts (+3.4% y/y). Prices also fell 0.7% q/q in Michigan (+1.0% y/y) and very slightly in Ohio (+2.1% y/y).

In New York, house prices rose a modest 0.9% (9.9% y/y) and in California prices increased 1.2% (14.3% y/y), a slowdown from the 28.0% y/y gain in late 2004.

House price appreciation continued strong in Florida as evidenced by a 2.5% q/q gain (21.3% y/y). Last year prices in Florida rose 25.9% and in 2004 were up 17.0%.In New Jersey prices also were firm and rose 1.9% (12.4% y/y).

View the latest OFHEO release here.

What Happens to Banks When House Prices Fall? U.S. Regional Housing Busts of the 1980s and 1990s from the Federal Reserve Bank of St. Louis is available here.

OFHEO 2Q '06 1Q '06 Y/Y 2005 2004 2003
House Price Index 1.2% 2.2% 10.1% 13.3% 10.8% 6.9%
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