Washington, D.C., December 3--Average U.S. home prices increased 12.97 percent from the
third quarter of 2003 through the third quarter of 2004. Appreciation for the most
recent quarter was 4.62 percent, or an annualized rate of 18.48 percent.
The figures were released Wednesday by the Office of Federal Housing Enterprise Oversight (OFHEO), as part of OFHEO’s House Price Index (HPI). The HPI is a quarterly report analyzing housing price appreciation trends.
The appreciation reflected in this quarter’s report shows further acceleration from already rapid increases. The growth in house prices over the past year surpasses any increase in 25 years, the government report said.
Several factors could be playing a role in the large house price increases in the third
quarter. Despite increases in the Federal Funds target rate, long-term interest rates
decreased slightly, making it less expensive to purchase a house.
Refinancing volume fell last quarter substantially below levels in recent quarters. Previously, during the period of intense refinancing, HPI increases may have been held down because appraised values used for refinancing mortgages with low loan-to-value ratios may not have kept up with recent market price increases.
While the HPI includes data based on both purchase and refinance transactions, this quarter’s report also includes a comparison of the HPI with an index based solely on purchase transaction data.
Also in this report, Metropolitan Statistical Areas (MSAs) have been revised to represent the areas defined by the Office of Management and Budget (OMB) in 2003 and based on 2000 Census data. As a result, this report now includes house price
index data for 25 additional MSAs.
Looking at the data, over the past year Nevada’s house prices grew 35.78 percent,
the largest HPI increase for any state. Development of commercial property in Las
Vegas continues to abound while unemployment is minimal and appreciation in the metropolitan area of Las Vegas-Paradise was 41.74 percent, the most for any MSA.
Rounding out the top five states for annual house price appreciation are Hawaii at
28.29 percent, California at 27.18 percent, the District of Columbia at 23.95 percent,
and Rhode Island at 22.54 percent. Maryland was not far behind in sixth place at
22.32 percent.
As in the last two quarters, the smallest increases occurred in Indiana, Utah and Texas.
Other significant findings in the HPI:
1. The MSA with the second highest rate of annual growth was Riverside-San
Bernardino-Ontario, CA with annual appreciation of 33.81 percent. It borders the MSA with the highest annual growth, Las Vegas-Paradise, NV.
2. Seventeen of the 20 MSAs with the largest price gains in the past year are in
California (11), Nevada (2), and Florida (4). Rounding out the top 20 are Honolulu,
HI; Washington, DC-Arlington-Alexandria, VA; and Atlantic City, NJ.
3. Indiana had four MSAs among the 20 MSAs with the lowest rates of house price
appreciation. North Carolina had three; and Colorado, South Carolina, Texas and
Utah each had two.
4. The Census Division with the highest rate of growth was Pacific (Washington,
Oregon, and California) at 22.72 percent. West South Central was the lowest at 4.80
percent. It is comprised of Oklahoma, Arkansas, Louisiana, and Texas.
