Study says home prices continue slowdown

March 2, 2007 – The rate of increase in U.S. home prices remained steady in the fourth quarter of 2006, extending the slowing trend that began earlier in the year, federal regulators reported Thursday. This provided yet another indication of the slowdown in the once-booming housing market.

Average home prices rose 1.12 percent in the October-December period, compared with 3.03 percent in the fourth quarter of 2005, the report showed. Over the year, house prices increased by 5.9 percent – a marked slowdown from the 13.2 percent jump in 2005. Still, the report noted, home prices continued to grow faster than prices of other goods and services.

“These data show that, on the whole, (home) prices are still rising, albeit at a much slower pace,” OFHEO Director James B. Lockhart said in a statement. “This suggests that house-price appreciation is, for now, more in line with historical norms.”

Sales of new homes plummeted by 16.6 percent in January from the previous month, the steepest decline since January 1994. As sales cooled, so did home prices. The median sales price of a new home – where half sell for more and half for less – dropped to $239,800 in January, down 2.1 percent from January 2006, the Commerce Department said Wednesday.