U.S. home prices slow from record pace, but remain strong.

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Average U.S. home prices increased 12 percent from the third quarter of 2004 through the third quarter of 2005--a two-percentage-point decline from the previous record-setting four-quarter appreciation rate of approximately 14 percent, according to the Office of Federal Housing Enterprise Oversight (OFHEO).

OFHEO's quarterly House Price Index (HPI) also noted appreciation for the most recent quarter was 2.86 percent.

"Appreciation rates in the third quarter were extremely strong, although some deceleration can be seen in a number of faster-appreciating markets," stated OFHEO Chief Economist Patrick Lawler. "Price momentum in the Pacific and New England states, in particular, has pulled back."

House prices grew more rapidly over the previous year than did prices of non-housing goods and services as reflected in the Consumer Price Index (CPI). House prices rose 12 percent while prices of other goods and services rose just 4.5 percent, according to OFHEO.

The Pacific Census Division continued to exhibit the fastest price appreciation in the third quarter, despite a decline in appreciation rates from the previous quarter. However, at slightly less than 16.9 percent, the four-quarter appreciation rate in the South Atlantic Division trailed the Pacific Census Division by less than one-half of a percentage point.

Price growth in Arizona continued to accelerate in the third quarter, with a one-year appreciation rate of 30 percent--the largest of any state by a wide margin. Florida became the second-fastest appreciating state, with a four-quarter appreciation of 25 percent, while 11 of the 20 highest-ranking metropolitan statistical areas (MSAs) in the third quarter were located in Florida, reported OFHEO.

Nevada's four-quarter appreciation rate declined by more than 10...

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