OFHEO's HPI shows largest one-year home-price increase since 1979.

Position:Business Alert - Office of Federal Housing Enterprise Oversight - House Price Index

THE OFFICE OF FEDERAL HOUSING ENTERprise Oversight's (OFHEO's) quarterly House Price Index (HPI) shows that average U.S. home prices increased 9.36 percent from the second quarter of 2003 through the second quarter of 2004. Appreciation for the second quarter of 2004 was 2.21 percent, or an annualized rate of 8.83 percent.

The quarterly appreciation is more than 50 percent faster than the upward revised 1.45 percent increase in the first quarter of 2004. Over the past four quarters, house-price rises far exceeded gains in the prices of nonhousing goods and services incorporated into the Consumer Price Index (CPI). House prices rose 9.36 percent, while the price of other goods and services rose 3.03 percent.

"The appreciation over the past year is the largest four-quarter increase since 1979," said Patrick Lawler, OFHEO's chief economist. "These data show no signs of the long-anticipated, and ultimately inevitable, slowing of house-price inflation."

The four states experiencing the greatest increases over the past year are Nevada, Hawaii, California and Rhode Island. As in the first quarter of 2004, the smallest increases occurred in Utah, Texas and Indiana. No states experienced negative quarterly growth.

The five states with the lowest annual percentage house-price changes as of June 30, 2004, are Colorado (3.51 percent), Alabama (3.26 percent), Indiana (3.05 percent), Texas (2.91 percent) and Utah (2.58 percent).

U.S. house-price appreciation over the past year of more than 9 percent represents an acceleration over the 7 percent average annual rise of the preceding four years, according to the HPI. However, price changes have actually slowed in the New England and West South Central (Arkansas, Louisiana, Texas and Oklahoma) Census divisions. New England slowed to a 10.65 percent increase, while West South Central prices rose only 3.83 percent--the smallest increase of all...

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