Utah housing market still thriving

Utah's housing market continues to thrive, despite a nationwide slump in third-quarter prices that was the worst in more than a decade.

With 12.9 percent growth in home prices from the third quarter of 2006 to the third quarter of 2007, Utah had the biggest increase in the nation, according to a report issued Thursday by the Office of Federal Housing Enterprise Oversight. Four of the state's metropolitan areas were among the top 11 in the nation for home-price increases.

Only the St. George market is suffering, with a 0.9 percent drop in prices in the third quarter. The St. George area is experiencing the same problems that are plaguing other parts of the nation, primarily because it also was one of the hottest areas during the housing boom during the first half of the decade, said Jim Bringhurst, president of the Utah Association of Realtors.

"Our market is very different from the rest of the country," he said. "We have a healthy market, and since we didn't see the massive gains, we won't see the big drops."

U.S. home prices marked a quarterly decline for the first time in 13 years in the third quarter, according to the report. Home prices dipped 0.4 percent nationwide in the July-September period, compared with the previous quarter.

Compared with the third quarter of 2006, U.S. home prices posted an increase of 1.8 percent, but it was the smallest year-over-year increase since 1995, according to the agency, which oversees the big mortgage-finance companies Fannie Mae and Freddie Mac.

"While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country," agency director James B. Lockhart said in a statement.

Ten states saw declining prices compared with the third quarter in 2006, and 21 states saw a drop in prices since the second quarter of this year.

Price declines were steepest in Michigan (down 3.7 percent), California (down 3.6 percent), Nevada (down 2.4 percent), Massachusetts (down 2.3 percent) and Rhode Island (down 2.2 percent.) Of the 20 metropolitan areas with the largest declines, 17 were in California and Florida.

"Rising inventories of for-sale properties are clearly having a material impact on home prices," said OFHEO chief economist Patrick Lawler in a news release. "Until those inventories shrink, that will be a great source of resistance to price increases."