Magazine article American Banker

Home Price Gains Rev Up to 2.21% in 2Q

Magazine article American Banker

Home Price Gains Rev Up to 2.21% in 2Q

Article excerpt

Home price appreciation picked up dramatically in the second quarter, contributing to the highest 12-month rise in prices since 1979, the Office of Federal Housing Enterprise Oversight said Wednesday.

Average prices climbed 2.21%, versus 1.45% in the first quarter, the regulator said. In last year's fourth quarter prices surged 3.73%.

"Home sales have been running ahead of record levels again in '04, so given the demand out there, I'm not surprised," said Doug Duncan, the chief economist for the Mortgage Bankers Association.

Mr. Duncan predicted that originations of mortgages for home purchases will set another record this year with demand staying strong and interest rates remaining low. Even though fewer applications are for refinancings, the trade group's weekly survey, released Wednesday, shows total applications up 2.6% from a year earlier.

OFHEO said home prices at the end of the second quarter were 9.36% higher than a year earlier. That increase compares to an average 7% rise over the previous four years that ended June 30. Prices climbed at an annual pace of 8.83% during the second quarter.

The agency also revised upward the January-to-March increase from 0.96%, a level that would have made it the first quarterly increase below 1.0% since the second quarter of 1998.

"These data show no signs of the long-anticipated, and ultimately inevitable, slowing of house price inflation," said Patrick Lawler, OFHEO's chief economist, in a press release. …

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