Just in case you thought that US housing prices were falling: er, not so much. Kash Mansori has the details, but suffice to say that the US House Price Index rose by 5.9% in 2006, and by 1.1% in Q4.
“These data show that, on the whole, prices are still rising, albeit at a much slower pace,” said [OFHEO Director James B] Lockhart. “This suggests that house price appreciation is, for now, more in line with historical norms.”
49 of the 50 states saw prices rise in 2006; Utah prices rose by 17.6%. The only state to see a fall was Michigan, where prices fell just 0.4%. Another surprise: the Miami metropolitan area — supposedly home of the frothiest speculative bubble and the hardest consequent bust — actually saw prices rise by 15.3% in 2006. (Of course, the Miami metropolitan area is much more than South Beach. But still.)
Does this mean there’s nothing to worry about? Of course not. Maybe it just means, in Kash’s words, that “the housing bust has some way to go yet.” And it’s worth noting that the index is based on “conforming mortgages” for the purposes of Fannie and Freddie — which means nothing over $417,000, for starters, and certainly no co-ops. But if you’re in the market for a house and you’re wondering where the housing bust is, here’s your answer: it hasn’t fed into prices yet.
Rates and incomes likely cushioned the impact of rising nominal prices. As for where the bust might be, have you checked out housing starts lately?
The Case-Shiller index posted declines in the last two quarters of ’06, and, aside from its including non-conforming loans, I think its methodology is better.