Home price gains slowest in two years

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WASHINGTON (Reuters) - Average U.S. home prices rose 12.5 percent over the 12 months to March 31, but gains in the most recent quarter indicate easing in the market, the U.S. Office of Federal Housing Enterprise Oversight said Thursday.

Home prices rose 2.03 percent from the fourth quarter of 2005 to the first quarter of 2006, or at an annualized rate of 8.12 percent. That quarterly rate is the lowest since the first quarter of 2004, the government agency said.

While house prices continued to climb in many areas, some states saw price declines in the first quarter for the first time since the fourth quarter of 2002, the report said.

"These data show average housing prices still growing stronger than some might have expected," said James Lockhart, OFHEO's acting director. "They do indicate, however, that price growth is moderating in some parts of the country, particularly in areas where prices have been rising the most."

Arizona again posted the strongest gains, with house prices up 32.8 percent over the 12 months through March 31. But quarterly appreciation slowed significantly, to 3.8 percent in the first quarter of 2006 from 7.4 percent in the fourth quarter of 2005.

Florida markets continued to see strong house price gains, with that state home to 10 of the 20 metro areas with the strongest appreciation in the past year.

Iowa and South Dakota, however, saw price declines in the first quarter compared with the fourth quarter, the report said.

First Quarter Home Price Appreciation by State

Source: Office of Federal Housing Enterprise Oversight