JANUARY 2004

Home Prices Rose During Third Quarter 2003

There was more good news for homeowners (and discouraging news for renters) in the third quarter as home prices rose nationally at an annualized pace of 5.56%, the fastest pace in nearly a year. Home price appreciation had been decelerating during the previous three quarters. The gains in home prices were geographically broad-based, although some metropolitan areas experienced declines. California remains a "hot" real estate market, with Los Angeles and San Diego the two fastest growing areas in terms of home prices among the 20 largest metropolitan statistical areas in the U.S. . Other metropolitan areas with especially strong price appreciation include Washington, DC, Philadelphia and Minneapolis. All statistics were compiled by the U.S. Office of Federal Housing Enterprise Oversight (OFHEO).

For the past four quarters, home price increases have moderated, relative to recent years. OFHEO Director Armando Falcon, Jr., said in a press release that "these numbers in our new [Home Price Index] report show a stabilization of prices with continued strength in housing markets throughout most of the country. This is a continuation of the gradual and orderly return to the historic average that we’ve been seeing this year." While housing prices grew at nearly 5.6% over the past year, other goods and services in the consumer price index grew only 2.2%. Housing remains a good investment.