by Calculated Risk on 8/30/2007 10:01:00 AM

OFHEO House Price Index Shows Smallest Quarterly Increase Since 1994

U.S. home prices increased only slightly in the second quarter of 2007 according to the OFHEO House Price Index (HPI). The HPI, which is based on data from sales and refinance transactions, was 0.1 percent higher in the second quarter than in the first quarter of 2007. This is below the revised growth rate of 0.6 percent for the previous quarter and the lowest since the fourth quarter of 1994. Prices in the second quarter of 2007 were 3.2 percent higher than they were in the same quarter of 2006, the lowest annual price change since the 1996-97 period.

OFHEO’s purchase-only index, based solely on purchase price data, indicates less appreciation for U.S. houses over the past year than does the all transactions HPI. The purchase-only index increased 2.6 percent between the second quarter of 2006 and the second quarter of 2007, compared with 3.2 percent for the HPI. However, for the second quarter, the purchase-only index increase was slightly higher at 0.5 percent (seasonally-adjusted).

The figures were released today by OFHEO Director James B. Lockhart as part of OFHEO’s quarterly report analyzing housing price appreciation trends. “House prices were basically flat in the second quarter despite tightening credit policies, rising foreclosure rates, and weakening buyer sentiment,” said Lockhart. “Significant price declines appear localized in areas with weak economies or where price increases were particularly dramatic during the housing boom.”

The data in this release only include price information through June. To the extent that recent mortgage market instability may have affected housing demand and prices, those effects would be evident in OFHEO’s next HPI release.

More later.