House Price Index Shows Largest One Year Increase Since 1970's
|September 2, 2004|
U.S. House Prices Show Annual Rise of 9.36 Percent
WASHINGTON, D.C. – Average U.S. home prices increased 9.36 percent from the second
quarter of 2003 through the second quarter of 2004. Appreciation for the most recent quarter
was 2.21 percent, or an annualized rate of 8.83 percent. The figures were released today by
Armando Falcon, Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO),
as part of OFHEO’s House Price Index (HPI). The HPI is a quarterly report analyzing housing
price appreciation trends.
“The appreciation over the past year is the largest four quarter increase since 1979,” said
Patrick Lawler, Chief Economist at OFHEO. “These data show no signs of the longanticipated,
and ultimately inevitable, slowing of house price inflation.”
The quarterly appreciation is more than 50 percent faster than the upward revised 1.45 percent
increase in the first quarter of 2004. Over the past four quarters, house price rises far
exceeded gains in the prices of non-housing goods and services incorporated into the
Consumer Price Index. House prices rose 9.36 percent, while the price of other goods and
services rose 3.03 percent.
“House prices may become increasingly vulnerable to potential sustained higher interest rates
in the future, but that has not happened so far,” said Lawler. “Second quarter data do not fully
reflect increases in borrowing costs in the spring of this year because of the timing lag between
sales agreements or appraisals, and mortgage closings. Since then, mortgage rates have
eased, however, and the prospects of substantial increases in the near future appear to have
declined,” Lawler said.
The four states experiencing the greatest increases over the past year are: Nevada, Hawaii,
California and Rhode Island. Like last quarter, the smallest increases occurred in Utah, Texas,
and Indiana. However, this time no states experienced negative quarterly growth.
Other significant findings in the HPI: