Utah continued to outperform the rest of the country in home-price growth late in 2007.
The state topped the national rankings by having the highest percentage change in home prices year over year during the fourth quarter, according to a report released Tuesday.
Yet another report issued this week showed that sales of existing homes and condominiums in Salt Lake County were down 22 percent in January, compared to a year earlier, representing the lowest monthly sales activity in eight years.
The Tuesday report by the Office of Federal Housing Enterprise Oversight, the Beehive State came in first of all 50 states and the District of Columbia with a one-year home-price increase of 9.27 percent. Neighboring Wyoming came in second at 8.27 percent and North Dakota was third at 7.87 percent.
Montana at 6.90 percent and Alaska at 5.97 percent rounded out the top five.
"That shows you how strong our housing was," said Well Fargo economist Kelly Matthews. But he added he would have preferred to see the Utah one-year change come in a bit lower at around 5 percent because it would have indicated a trend toward getting the state's housing prices more aligned with household incomes.
Matthews cautioned he believes the housing market will likely start to see some price declines in the 2008 first quarter.
"When the first quarter comes out, I think we'll actually be a negative number versus the first quarter of 2007," he said. "To achieve affordability, the only way to make the adjustment is for prices to slip down a bit."
"Over the next six months, we will see a noticeable markdown of some of these homes in order to reduce the excess inventory sold," said Matthews. "On a year-over-year basis, by mid-year 2008, we'll be 6 to 8 percent down from the previous year."
On a national scale, U.S. home prices dropped 8.9 percent in the final quarter of 2007 compared with a year ago, Standard & Poor's said Tuesday the steepest decline in the 20-year history of its housing index.
The S&P/Case-Shiller home price indices, which include a quarterly index, a 20-city index and a 10-city index, reflect year-over-year declines in 17 metropolitan areas, with double-digit declines in eight of them.
The 10-city index also set a record annual decline of 9.8 percent in December, while the 20-city index dropped 9.1 percent.
Home prices also fell 5.4 percent from the previous three-month period, by far the largest quarter-to-quarter decline in the index's history. The quarterly index tracks prices of existing-family homes nationwide compared with a year earlier.
The OFHEO report also indicated Utah had four cities in the Metropolitan Statistical Areas with the greatest rates of appreciation between the fourth quarter of 2006 and the fourth quarter of 2007, including fourth-ranked Ogden/Clearfield at 10.80 percent, Provo/Orem ranked sixth at 10.46 percent, Salt Lake City was seventh at 9.60 percent and Logan placed eighth at 8.75 percent.
The report also said nationwide prices dipped 0.3 percent in the fourth quarter from the year-earlier period, their first annual decline in 16 years.
The Salt Lake Board of Realtors report this week showed sales of existing homes and condominiums in Salt Lake County fell to 609 units in January 2008, down 22 percent from 777 units sold a month earlier and a drop of 47 percent compared to 1,146 sales in January 2007. January's sales were the lowest monthly sales activity since January 2000.
"Our slowing sales are a reflection of the continuing problems related to the nonprime mortgage market." Jillinda Bowers, president of the Salt Lake Board of Realtors, said in a prepared statement. "The nonprime market didn't exist eight years ago and those products today have largely dried up, resulting in fewer sales."
"The good news is another 30,000 households are expected to be created in Utah in 2008," Bowers said. "New households drive demand for housing. There should be enough new households formed to clear our excess listings."
Dave Mansell, president of the Utah Association of Realtors, said the Utah market will moderate but not as dramatically as some other states because there are more homes for sale now than in the past."Supply and demand will drive what takes place," he said. "I would anticipate not having huge drops on the average home (price), so unless you bought your house last week and have to sell it this month, you're probably going to be just fine."
Contributing: Associated Press.