Home Prices Gain at Slowest Pace in a Decade
U.S. house prices in the second quarter rose at the slowest pace in a decade as lenders tightened requirements to get mortgages, according to a government report.
Prices for previously owned single-family homes rose an average of 3.2 percent from a year earlier, the smallest gain since 1997, the Office of Federal Housing Enterprise, known as Ofheo, said today in Washington. Prices gained 0.08 percent from the first quarter, the slowest since a decline in the fourth quarter of 1991.
The worst U.S. housing slump in 16 years is deepening as buyers find it more difficult to get mortgages after loans entering foreclosure rose to a record. About 14 percent of banks raised standards for mortgages to their most creditworthy borrowers and 56 percent made it more difficult for people with limited or tainted records to get loans, according to a Federal Reserve survey of senior loan officers in mid-July.
The share of all types of mortgages entering foreclosure rose to 0.58 percent in the first quarter, the highest in a survey that goes back to 1972, the Mortgage Bankers Association said in a June 14 report. A report on the second quarter will be released next week.
U.S. home resales fell in July to an annual pace of 5.75 million, the slowest since November 2002, the National Association of Realtors said in an Aug. 27 report. Sales have declined for five consecutive months. A measure of the supply of homes for sale rose to the highest since October 1991.
Ofheo’s Home Price Index measures changes of values for individual properties using selling prices and appraisals. It excludes homes with mortgages higher than $417,000, the maximum allowed this year for loans bought by government-chartered Fannie Mae, the largest mortgage buyer, and Freddie Mac, No. 2. The report doesn’t give an average price, only the percentage change.