Average U.S. home prices rose 7.73 percent over the 12 months to Sept. 30, but the quarter-to-quarter gain was the lowest since 1998 and indicates a sharp deceleration in house price gains, the U.S. Office of Federal Housing Enterprise Oversight reported Thursday.
Home prices rose 0.86 percent from the second to the third quarter, an annualized rate of 3.45 percent and the lowest quarterly increase since the second quarter of 1998, OFHEO said.
The data "provide more evidence that the long-forecasted national deceleration in house prices is occurring," said James Lockhart, the OFHEO director.
Since the spring of 2004, year-over-year price appreciation has fallen from a peak of 13.9 percent.
Regions that experienced the sharpest appreciation in recent years were the most lagging in the third quarter.
Quarterly price declines occurred in more than half the cities in California, OFHEO reported. The West and Northeast regions of the United States saw weak gains in the quarter.
"The transition from sizzling markets to normal or weak markets has been orderly so far," said Patrick Lawler, chief economist at OFHEO.
Recent low interest rates are making home ownership more affordable and acting as a cushion against a hard fall for the sector, Lawler said.
The data were released as part of OFHEO's House Price Index, a quarterly report analyzing housing price trends.