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Off the Charts

Where House Prices Shot Up, Rebound Is Slowest

WHEN an economy is growing rapidly, and the population is increasing, house prices are likely to rise.

Conversely, areas with slow growth are not likely to see house prices increase.

That is generally what has happened in the United States since the summer of 2007, when house prices peaked, as measured by the Federal Housing Finance Agency index.

But there are exceptions. In the Pacific region, house prices soared during the boom. But they have performed relatively poorly in recent years even though the regional economy has outpaced the national one.

In the East North Central region — Illinois, Indiana, Michigan, Ohio and Wisconsin, the bulk of the states in the so-called Rust Belt — the economy has grown more slowly than in any of the other eight regions tabulated by the Census Bureau, and population growth has also lagged other regions. But home prices have performed better than might have been expected.

The anomalies appear to reflect excesses during the housing boom. In the seven years before home prices peaked in June 2007, they rose 60 percent for the entire country. But in the Pacific states — Alaska, California, Hawaii, Oregon and Washington — prices climbed 115 percent.

Perhaps as a result, home prices in that region fell further than in any other region during the Great Recession, and now remain 14.1 percent lower than they were in June 2007, despite an economy that has done better than the national average.

Over all, the housing finance agency reported this week, home prices nationally have recovered to the point that they are only 4.6 percent lower than the peak value.

As can be seen in the accompanying charts, the East North Central states have matched that performance, and thus done better than many regions, despite having less economic growth than any other region since mid-2007. That may reflect the fact that house prices in that region rose just 26 percent during the seven years before the housing bubble burst, less than in any other region.

House price indexes, it should be noted, can vary sharply. The housing finance agency index uses mortgages bought or insured by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that the agency regulates. That excludes the sales history of homes that require so-called jumbo mortgages, loans too large for Fannie and Freddie to buy.

The index did not rise as rapidly as some others did during the boom, but it continued to go up for nearly a year after a major competitor, the Case-Shiller 20-city composite, peaked. That index has not recovered as rapidly as the housing finance agency index since the recession ended.

According to the agency index, the best-performing region since 2007 has been the one called West South Central by the Census Bureau, comprising the states of Arkansas, Louisiana, Oklahoma and Texas. Home prices there are now 14.6 percent higher than they were in the summer of 2007.

That is also the section that has had the strongest economic growth during the period, in large part because it benefited from the boom in energy production. At the end of 2013 — the latest regional data available — the real gross domestic product of that group of states was 18.6 percent larger than it had been in mid-2007. That is more than twice the growth of the entire country during the period.

The mining industry, which includes oil and gas wells, accounts for about 10 percent of the economy in that region but produced 20 percent of the growth over the period.

In the West North Central area — Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota — home prices are 1.6 percent higher than they were in mid-2007. That area’s G.D.P. is up 11.8 percent, in significant part because of a surge in shale gas production in part of the region, and its population has also been rising. North Dakota, the center of the oil boom, has experienced both a surging population as people move in and the fastest economic growth of any state.

A version of this article appears in print on  , Section B, Page 3 of the New York edition with the headline: Where House Prices Shot Up, Rebound Is Slowest. Order Reprints | Today’s Paper | Subscribe

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