by Calculated Risk on 6/01/2006 10:02:00 AM

The Office of Federal Housing Enterprise Oversight (OFHEO) released the Q1 2006 House Price Index.

House Price Increases Continue; Some Deceleration Evident
OFHEO House Price Index Shows Annual Rise of 12.5 Percent

WASHINGTON, D.C. – U.S. home prices were 12.54 percent higher in the first quarter of 2006 than they were one year earlier. Appreciation for the most recent quarter was 2.03 percent, or an annualized rate of 8.12 percent. The quarterly rate is about one percentage point below the rate from the previous quarter and is the lowest rate since the first quarter of 2004. The figures were released today by OFHEO Acting Director James Lockhart, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

“These data show average housing prices still growing stronger than some might have expected,” said Lockhart. “They do indicate, however, that price growth is moderating in some parts of the country, particularly in areas where prices have been rising the most.”

House prices continued to grow considerably faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index. House prices rose 12.5 percent, while prices of other goods and services rose
only 4.2 percent.

“Increasing sales inventories are apparently giving buyers greater bargaining power, while increasing interest rates are dampening demand," said OFHEO Chief Economist Patrick Lawler.

Click on graph for larger image.

As noted, the quarterly appreciation slowed - but not as much as I had expected.

From a bubble perspective, three of the most closely watched cities have been Boston, Sacramento and San Diego - all three have shown signs of a housing slowdown.

Boston prices increased 0.51% in Q1 2006 and 5.6% for the year.

Sacramento prices increased -0.24% for the quarter, and 13.2% for the year.

San Diego prices increased 0.23% for the quarter, and 8% for the year.

The housing slowdown is starting to show up in the prices for these areas.