Home Price Increase Slows in First Quarter

WASHINGTON – U.S. home prices are continuing to go up, but they did so at a slower rate in the first quarter 2004 after consumers’ year-end 2003 rush to buy homes fueled by concerns about rising mortgage rates tapered off. According to the Office of Federal Housing Oversight, the 7.71% first quarter increase was below the 8.13% year-on-year increase for the fourth quarter 2003. The OFHEO said that while the housing market remains “solid,” the recent rise in mortgage rates should help cool down the pace of home prices and sales in the second half of this year. Annualized home appreciation during the first quarter slowed from the 14.85% rise for the fourth quarter. The federal agency said the first-quarter annualized increase was the smallest since the reported 3.23% for the second quarter of 1998. Between the fourth quarter 2003 and first quarter 2004, home prices on average increased only 0.96%, the smallest quarterly increase since the 0.81% increase for the second quarter of 1998. The OFHEO said home prices in Hawaii, Nevada, Rhode Island, the District of Columbia, and California increased the most during the past 12 months. The average appreciation in those five markets was almost double the national average. In contrast, home price increases were the smallest in Utah, Texas, Indiana, Colorado, and Alabama. The average home appreciation in Utah – 1.95% – was the lowest among all the states. For the first quarter 2004, average home values in Vermont, Alaska, North Dakota, South Dakota, Iowa, and Nebraska decreased from fourth quarter 2003 levels. No states experienced price decreases in the fourth quarter from the third quarter 2003. -