Average U.S. home prices increased 12.95 percent from the fourth quarter of 2004 through the fourth quarter of 2005. Appreciation for the most recent quarter was 2.86 percent, or an annualized rate of 11.4 percent. The increase during 2005 is similar to the revised increase of 12.55 percent for the year ended with the third quarter of 2005, showing no evidence of a slowdown.
As I’ve said before, I prefer using the HPI data to look at individual real estate markets, since real estate markets are inherently local, and so different real estate markets can behave very differently.
The following picture shows the 6-month change in house prices in several “hot” housing markets, with a market defined as an individual Metropolitan Statistical Area (MSA). Prices were still rising strongly during the second half of 2005 in most of these markets, but the pace of appreciation moderated in all of them.
The next picture shows the same thing for several markets that missed out on the huge price appreciations of 2002-05. They seem to have experienced some increase in house price appreciation during 2005, but again, the rate of price increases in all of them were constant or falling in the second half of the year.
This all seems quite consistent with what Calculated Risk wrote the other day: housing markets seem to be slowing, but not crashing.