Home Values Nationwide Up 13% in 4th Quarter

Fewer Sales Eventually Will Take Prices Down

In an indication that the recent slowdown of home sales has yet to affect prices, the average U.S. house continued to gain value through the end of 2005, posting a fourth-quarter increase of nearly 13 percent from the fourth quarter of 2004, according to a government report released yesterday.

In the home price survey by the Office of Federal Housing Enterprise Oversight, all but one of 275 metropolitan housing markets showed improved value, many at record rates of increase. In the market that was an exception, Burlington, N.C., prices fell 1 percent over the year.

The average home price increased 24 percent in 2005 in the market that includes the District, Northern Virginia, Prince George's, Charles and Calvert counties in Maryland and Jefferson County in West Virginia. It was up 20 percent in the Montgomery County-Frederick County market.

Two reports this week showed slower sales of new and existing homes. The report on sales of previously owned homes, released Tuesday by the National Association of Realtors, showed sales down for the fifth straight month.

The OFHEO report is based on data of repeat sales and refinancings from Fannie Mae and Freddie Mac, which the agency oversees.

Economists said the effect of slowing sales on home prices appears limited so far, even though long-term interest rates have been climbing since mid-2005. "We're certainly not seeing it in the data yet," said Patrick Lawler, OFHEO's chief economist.

The average home price nationwide increased 12.95 percent in the fourth quarter of 2005 from the comparable quarter a year earlier. Prices in the South Atlantic area, which includes states from Maryland to Florida, went up 17.8 percent -- the highest rate of increase since 1975 -- as far back as the agency tracks the numbers. Price gains in the Washington area were a major reason for that record growth.

Lawler said that while appreciation continued at near-record highs, that will inevitably come to an end. "At some point they have to slow down. The current rates are certainly unsustainable," he said.

The report shows the rate of increase has decelerated sharply in many areas and slightly nationwide.

For example, the average home price in Virginia went up 20 percent in the fourth quarter of 2005 from the fourth quarter of 2004. But the annual rate of appreciation based on the last three months of 2005 is lower, at 15 percent. In Maryland, where the average price increased 21 percent since the fourth quarter of 2004, the annual rate based on the last three months of 2005 slowed to 18 percent.

But in the District, the annual rate based on the fourth quarter of 2005 matched the growth seen over the entire year, 22 percent.