Average Price of Homes Up 12%

Average U.S. home prices climbed 12% over the 12 months that ended Sept. 30, though price increases slowed in some hot markets, the Office of Federal Housing Enterprise Oversight said Thursday.

Home values appreciated 2.9% during the third quarter from the second quarter of 2005, or at an annualized rate of 11%.

“Appreciation rates in the third quarter were extremely strong, although some deceleration can be seen in a number of the faster-appreciating markets,” Chief Economist Patrick Lawler of the oversight office said in a statement.

Price momentum in the Pacific and New England states, in particular, has pulled back, he said.

The report adds to mixed reports suggesting that the 5-year-old U.S. housing boom may be slowing as mortgage interest rates edge higher.

Four-quarter house price gains slowed from the 12 months that ended June 30, when home values appreciated a revised 14% from the same quarter the previous year -- the largest such gain since the first quarter of 1990, the first quarter for which the oversight office maintains price data.

U.S. sales of previously owned homes fell 2.7% in October, but new-home sales soared 13% and private residential construction spending climbed to a record high.

The regulator said the biggest four-quarter house price growth of any state was in Arizona, with 30%. Growth in Nevada over 12 months slowed to 17.6% from 28.6%. Prices rose 19.3% in California.

The thinnest house price appreciation, by state, was in Michigan, with 4%.

Rising interest rates may further slow prices, Lawler said.

“Much of the recent run-up in mortgage rates occurred after the third quarter ended. To the extent that those increases may have affected prices, those effects will be evident in future quarters,” he said.