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U.S. Home Prices Climb 1.17%

The quarterly gain is the smallest since 1999 and the latest sign of the slowing housing market.

September 06, 2006|From Reuters

WASHINGTON — U.S. house prices rose by slightly more than 1% in the second quarter, the smallest gain in more than six years and the latest sign of the slowing housing market, according to a government report released Tuesday.

Prices rose 1.17% in the second quarter over the year-earlier period, the slowest rate since the fourth quarter of 1999, according to an Office of Federal Housing Enterprise Oversight report.

"These data are a strong indication that the housing market is cooling in a very significant way," James Lockhart, the agency's director, said in a statement.

The agency, which regulates mortgage finance giants Fannie Mae and Freddie Mac, compiles a quarterly index of U.S. home prices.

Rising interest rates, fewer investor purchases and greater house inventories were cited as reasons for the slowdown in home values.

A surge in housing construction has created a glut, said agency chief economist Patrick Lawler, "and these inventories will continue to constrain future appreciation rates."

U.S. house prices increased 10% on average over the last 12 months, and prices are on track to increase 4.68% for the year, the report said.

Every state in the nation saw prices appreciate in the last 12 months, the report found, but some regions saw a serious slowdown from the recent breakneck pace.

Some states along the Atlantic -- such as Florida, Virginia and Maryland -- saw 12-month price appreciation slow to 13.7% at the end of June, down from growth of 17.4% in the 12 months ended in March. That is the most significant price deceleration since the early 1980s, according to the report.

Still, the slowdown has not erased the big gains many states have seen during the recent housing boom.

In the last five years, house prices have more than doubled in Florida, Maryland, California and Nevada.

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