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."
Bringhurst does not believe that those negative numbers nationally portend a decline in prices for most of Utah, because the state's economy is still growing, unemployment is low and growth remains strong.
The Provo-Orem market, with a 14.3 percent increase, was second in the nation among metro areas for home-price increases, trailing Wenatchee, Wash., a ranking it also held in the second quarter. Ogden-Clearfield was ranked fourth this past quarter, and Salt Lake City was fifth, with both areas seeing an increase of more than 13 percent in the past year and 2.4 percent in the past quarter.
The Logan metro area, which in the report included the northern Utah and southern Idaho/Cache Valley market, was ranked 11th in the nation, with a price increase of 9 percent from the third quarter last year. Third-quarter prices rose only 0.4 percent, however, compared to the previous quarter.
Other reports released Thursday provided a similar or worse picture for the national real estate markets.
The Commerce Department said Thursday that the median sales price of a new home fell 13 percent in October, compared with a year ago, to $217,800. It was the biggest annual decline since September 1970 in the median price, the point at which half of homes sell for more and half for less.
A mortgage research firm, meanwhile, said U.S. foreclosure filings nearly doubled in October from the same month last year. A total of 224,451 foreclosure filings were reported in October, Irvine-based RealtyTrac Inc. said Thursday.
Other measurements of home prices have been falling for some time while OFHEO's index, until now, had continued to rise. The reason, economists say, lies in differences in how home prices are calculated.
The widely tracked Standard & Poor's/Case-Shiller nationwide housing index, which fell 4.5 percent in the third quarter from last year, focuses on major metropolitan areas and includes expensive properties as well as cheaper ones. The federal government index, while more national in its scope, excludes higher-priced homes and ones financed by riskier mortgages.
A separate report Wednesday from the National Association of Realtors said the median price of a home sold in October declined to $207,800, a drop of 5.1 percent from a year ago, the biggest year-over-year price decline on record.
But many economists consider the OFHEO and Case-Shiller indexes to be better measurements of the housing market than the Realtors' report, because both indexes examine price changes for the same properties over time instead of calculating a median price for houses sold during a particular month or quarter.The OFHEO index is calculated solely using home loans of $417,000 or less that are bought or backed by government-sponsored mortgage companies Fannie Mae and Freddie Mac. Importantly, that excludes properties bought with some of the riskier varieties of home loans that have gone sour this year.
Contributing: Associated Press E-mail: [email protected]
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