OFHEO House Price Index Shows Declines in Five States,
Continued Deceleration in Others
U.S. home prices rose in the third quarter of this year, but the rate of
increase continued to slow and some areas experienced actual pricedeclines. Nationally, home prices were 7.73 percent higher in the third quarter of 2006 than they were one year earlier. Appreciation for the most recent quarter was 0.86 percent, or an annualized rate of 3.45 percent. This reflects a further slowdown from that reported for the second quarter when the quarterly appreciation rate was 1.3 percent and the annualized rate was 5.1 percent. The quarterly increase is the lowest since the second quarter of 1998.
“Our newest data confirm last quarter’s data that the housing market is in a decidedly different stage,” said OFHEO Director James B. Lockhart. “With U.S. house prices growing less than one percent during the third quarter, it provides more evidence that the longforecasted national deceleration in house prices is occurring. Given the five-year appreciation prior to this quarter of 56.8 percent, the slowdown is not unexpected. There are still some areas where appreciation rates remain very high but now they are the exception rather than the norm,” Lockhart said.
All five metros in Michigan show year-over-year decline. Detroit with -10%.
All eight metros in Ohio show decline .
All four metros in Indiana show decline.
Three out of four in Wisconsin show decline.
Minneapolis was -ve in Q2, is at 0.2% in Q3.
Eight of the nine Illinois metros are still positive. Chicago is down to 1.7% from 11% in 2005-Q4.
Loss of manufacturing jobs in the Mid West appears to be the primary reason for this early bust. And also for the same reason, home appreciation was tame compared to the the Coasts.
The National Median is down by -1.2%, and also the medians for all the four regions have declined as well.
From the NAR Report :
“Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate1 of 6.27 million units in the third quarter, down 12.7 percent from a 7.18 million-unit pace in the third quarter of 2005 – the second highest level on record, after a peak of 7.19 million in the second quarter of last year. Even with the overall decline, 10 states showed increases in sales activity from a year ago.
Third-quarter metro area single-family home prices, examining changes in 148 metropolitan statistical areas, 2 show 102 areas had price gains, including 21 metros with double-digit annual increases, and 45 areas experiencing price declines; one was unchanged.”
It is sad he did not live to see the downside of the economic cycle brought on by inflating the fiat money supply and the bust of a boom created by limitless credit expansion.