Bronco_Beerslug
09-05-2006, 10:24 AM
This is basically one big reason why the economy (housing and people borrowing and spending against their homes) has hung in like it has the last four years.
Many no interest and ARMs are coming due the next couple of years which could mean problems for a lot of people.
------------------------------------------------------------
FOR IMMEDIATE RELEASE
September 5, 2006
HOUSE PRICE APPRECIATION SLOWS
OFHEO House Price Index Shows Largest Deceleration
in Three Decades
WASHINGTON, D.C. – U.S. home prices continued to rise in the second quarter of this year but the
rate of increase fell sharply. Home prices were 10.06 percent higher in the second quarter of 2006
than they were one year earlier. Appreciation for the most recent quarter was 1.17 percent, or an
annualized rate of 4.68 percent. The quarterly rate reflects a sharp decline of more than one
percentage point from the previous quarter and is the lowest rate of appreciation since the fourth
quarter of 1999. The decline in the quarterly rate over the past year is the sharpest since the beginning
of OFHEO’s House Price Index (HPI) in 1975. The figures were released today by OFHEO Director
James B. Lockhart, as part of the HPI, a quarterly report analyzing housing price appreciation trends.
“These data are a strong indication that the housing market is cooling in a very significant way,” said
Lockhart. “Indeed, the deceleration appears in almost every region of the country.”
Possible causes of the decrease in appreciation rates include higher interest rates, a drop in
speculative activity, and rising inventories of homes. “The very high appreciation rates we’ve seen in
recent years spurred increased construction,” said OFHEO Chief Economist Patrick Lawler. “That
coupled with slower sales has led to higher inventories and these inventories will continue to constrain
future appreciation rates,” Lawler said.
House prices grew faster over the past year than did prices of non-housing goods and services
reflected in the Consumer Price Index. While house prices rose 10.06 percent, prices of other goods
and services rose only 4.41 percent. The pace of house price appreciation in the most recent quarter
more closely resembles the non-housing inflation rate.
Significant findings in the HPI:
1. All states show four-quarter appreciation, but five Midwestern and New England states had
small price decreases in the second quarter.
2. Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina
one year ago—Louisiana and Mississippi. Four-quarter appreciation rates were well above
the national average in several cities in the area including: New Orleans-Metairie-Kenner,
Gulfport-Biloxi, Baton Rouge, and Pascagoula. Gulfport-Biloxi and Pascagoula in fact logged
their highest appreciation rates since the beginning of OFHEO’s Index.
3. 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 percent to 13.74 percent.
4. New England’s four-quarter appreciation rate fell from 8.71 percent to 5.68 percent. 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.
5. 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 percent compared to the second quarter of 2005 but grew only 2.94 percent in the
most recent quarter.
6. While the 20 Metropolitan Statistical Areas (MSAs) 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.
7. Michigan had the greatest numbers of price decreases among ranked MSAs. Thirteen of
Michigan’s 16 ranked metropolitan areas exhibited quarterly price decreases.
One of the more striking elements of the new HPI data is that four-quarter appreciation rates fell sharply
in four of the five states that had fastest appreciation in last quarter’s HPI release. This subject is
discussed in greater detail in the Highlights section of this report on page 8.
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 second quarter of 2005 and the second quarter of 2006. That index increased 8.27
percent, compared with 10.06 percent for the HPI.
CONT (http://www.ofheo.gov/media/pdf/2q06hpi.pdf)
Many no interest and ARMs are coming due the next couple of years which could mean problems for a lot of people.
------------------------------------------------------------
FOR IMMEDIATE RELEASE
September 5, 2006
HOUSE PRICE APPRECIATION SLOWS
OFHEO House Price Index Shows Largest Deceleration
in Three Decades
WASHINGTON, D.C. – U.S. home prices continued to rise in the second quarter of this year but the
rate of increase fell sharply. Home prices were 10.06 percent higher in the second quarter of 2006
than they were one year earlier. Appreciation for the most recent quarter was 1.17 percent, or an
annualized rate of 4.68 percent. The quarterly rate reflects a sharp decline of more than one
percentage point from the previous quarter and is the lowest rate of appreciation since the fourth
quarter of 1999. The decline in the quarterly rate over the past year is the sharpest since the beginning
of OFHEO’s House Price Index (HPI) in 1975. The figures were released today by OFHEO Director
James B. Lockhart, as part of the HPI, a quarterly report analyzing housing price appreciation trends.
“These data are a strong indication that the housing market is cooling in a very significant way,” said
Lockhart. “Indeed, the deceleration appears in almost every region of the country.”
Possible causes of the decrease in appreciation rates include higher interest rates, a drop in
speculative activity, and rising inventories of homes. “The very high appreciation rates we’ve seen in
recent years spurred increased construction,” said OFHEO Chief Economist Patrick Lawler. “That
coupled with slower sales has led to higher inventories and these inventories will continue to constrain
future appreciation rates,” Lawler said.
House prices grew faster over the past year than did prices of non-housing goods and services
reflected in the Consumer Price Index. While house prices rose 10.06 percent, prices of other goods
and services rose only 4.41 percent. The pace of house price appreciation in the most recent quarter
more closely resembles the non-housing inflation rate.
Significant findings in the HPI:
1. All states show four-quarter appreciation, but five Midwestern and New England states had
small price decreases in the second quarter.
2. Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina
one year ago—Louisiana and Mississippi. Four-quarter appreciation rates were well above
the national average in several cities in the area including: New Orleans-Metairie-Kenner,
Gulfport-Biloxi, Baton Rouge, and Pascagoula. Gulfport-Biloxi and Pascagoula in fact logged
their highest appreciation rates since the beginning of OFHEO’s Index.
3. 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 percent to 13.74 percent.
4. New England’s four-quarter appreciation rate fell from 8.71 percent to 5.68 percent. 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.
5. 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 percent compared to the second quarter of 2005 but grew only 2.94 percent in the
most recent quarter.
6. While the 20 Metropolitan Statistical Areas (MSAs) 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.
7. Michigan had the greatest numbers of price decreases among ranked MSAs. Thirteen of
Michigan’s 16 ranked metropolitan areas exhibited quarterly price decreases.
One of the more striking elements of the new HPI data is that four-quarter appreciation rates fell sharply
in four of the five states that had fastest appreciation in last quarter’s HPI release. This subject is
discussed in greater detail in the Highlights section of this report on page 8.
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 second quarter of 2005 and the second quarter of 2006. That index increased 8.27
percent, compared with 10.06 percent for the HPI.
CONT (http://www.ofheo.gov/media/pdf/2q06hpi.pdf)