Washington 5th in Home Price Gains

From the NWREporter

Home prices in Washington increased 16.35 percent from a year ago, more than twice the national rate. Only Idaho, Utah, Arizona and Oregon outgained Washington.

Among 379 Metropolitan Statistical Areas (MSAs) or Metropolitan Divisions in the survey, Wenatchee, at number 5, was the highest ranking in the state. Seven other MSAs in the state were ranked on the top 30 list.

U.S. home prices rose in the third quarter of this year, but the rate of increase continued to slow and some areas experienced actual price declines. Nationally, home prices were 7.73 percent higher in the third quarter of 2006 than they were one year earlier.

Appreciation for the most recent quarter was 0.86 percent, or an annualized rate of 3.45 percent. This reflects a further slowdown from that reported for the second quarter when the quarterly appreciation rate was 1.3 percent and the annualized rate was 5.1 percent. The quarterly increase is the lowest since the second quarter of 1998. The figures were released by the Office of Federal Housing Enterprise Oversight (OFHEO) as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

"Our newest data confirm last quarter's data that the housing market is in a decidedly different stage," said OFHEO Director James B. Lockhart. "With U.S. house prices growing less than one percent during the third quarter, it provides more evidence that the long forecasted national deceleration in house prices is occurring. Given the five-year appreciation prior to this quarter of 56.8 percent, the slowdown is not unexpected. There are still some areas where appreciation rates remain very high but now they are the exception rather than the norm," Lockhart said.
Since the spring of 2004, year-over-year house price appreciation has fallen from a peak of 13.9 percent to 7.7 percent this quarter. Despite the deceleration, house prices grew faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index (CPI). CPI prices rose 3.1 percent.

The findings of the third quarter HPI show varying trends in different parts of the country.
The quarterly appreciation rate fell in seven of the nine Census Divisions. The West North Central and East North Central divisions had small increases over weak second quarters.
Five states -- New York, Rhode Island, Michigan, New Hampshire, and Massachusetts -- saw price declines from the second to the third quarter of the year.

Michigan was the first state to show a year-over-year decline in more than six years. Prices fell in Michigan 0.6 percent between the third quarter of 2005 and the third quarter of 2006.
Appreciation rates remain at or near record-setting rates in areas affected by Hurricane Katrina. Baton Rouge, Gulfport-Biloxi, and Mobile all had their highest four-quarter appreciation rates ever with four-quarter price growth of 14.1, 23.3, and 17.5 percent respectively.

Idaho now tops all states with the highest four-quarter appreciation rate with prices 17.5 percent higher in the third quarter of 2006 than they were a year earlier. Other states with still large year-over-year increases were Utah (17.4 percent), Oregon (16.9 percent), and Arizona (16.4 percent).

Quarterly price declines occurred in more than half the cities in California. Fifteen of 25 California cities in OFHEO's list of ranked Metropolitan Statistical Areas (MSAs) and Divisions experienced price declines relative to the second quarter.

"House prices continued to rise through the third quarter in most of the country, but generally at only low or moderate rates," said OFHEO Chief Economist Patrick Lawler. "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."

OFHEO's House Price Index is published on a quarterly basis and tracks average house price changes in repeat sales or refinancings of the same single-family properties. Changes in the mix of data from refinancings and house purchase transactions can affect HPI results.

An index using only purchase price data indicates somewhat less price appreciation for U.S. houses between the third quarter of 2005 and the third quarter of 2006. That index increased 6.0 percent, compared with 7.7 percent for the HPI.