Housing Bubble

House Price Index indicates growth decelerating

March 03 , 2003

WASHINGTON, D.C. – Armando Falcon, Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO), financial safety and soundness regulator for Fannie Mae and Freddie Mac, today released OFHEO’s House Price Index (HPI), a quarterly report analyzing housing appreciation trends. OFHEO has determined that average U.S. home prices increased 6.89 percent from the fourth quarter of 2001 through the fourth quarter of 2002. However, appreciation was much slower in the second half of the year than the first half. The quarterly national average price appreciation showed continued deceleration with 0.83 percent compared with a revised 1.4 percent last quarter. While this number may revise next quarter, the last quarterly appreciation rate below 1.0 percent was second quarter 1998.

For the fourth quarter of 2002, only 4 states, Vermont, Wyoming, Alaska and Nebraska, experienced negative quarterly growth compared with 7 states last quarter. Of the 185 ranked Metropolitan Statistical Areas (MSAs), 22 experienced negative quarterly growth, compared with 33 last quarter. California continues to dominate the Top 20 MSAs with 11 areas showing especially rapid appreciation. In the last five years, average U.S. appreciation has been 38.29 percent. Since 1980, average U.S. price appreciation has been 184.90 percent.

Source: Office of Federal Housing Enterprise Oversight (OFHEO)