Rapid Escalation in Home Values Slows

Home prices rose 0.25% in the last three months of 2001 from the third quarter, their smallest increase in five years, the Office of Federal Housing Enterprise Oversight said.

This sharp slowdown in home appreciation could drain a financial resource for homeowners, who have kept the recession from worsening. Americans have not pared back spending despite growing unemployment and a poor stock market.

Homeowners have benefited from rapid home appreciation by selling their homes, or borrowing against higher home values through refinancing, or by taking out home equity loans.

They reaped as much as $84 billion in cash and loans from their homes in 2001, adding 0.2% to their disposable income, according to estimates by analysts.