U.S. Northwest Leads 4th-Quarter Home Price Gains

By Kathleen M. Howley and Brian Louis

March 2, 2007 (Bloomberg) -- The U.S. real estate boom has gone West. And Northwest.

The state with the fastest growing home prices in the fourth quarter was Utah, at 18 percent, more than double the U.S. average, a government report showed today. Wyoming was No. 2 at 14.3 percent and Idaho was third at 14 percent. Washington gained 13.7 percent, and Oregon was fifth at 13.5 percent.

Nationally, the real estate market stagnated, with a gain of 5.87 percent from a year earlier, the slowest pace since 1999, the Office of Federal Housing Enterprise Oversight said today in Washington. The report doesn't give an average price, only the percentage change. The West and Northwest benefited from strong job markets, more affordable housing, population growth and vacation home sales.

"As long as we have job growth here, nothing will slow us down,'' Gary Cannon, the co-owner of Re/Max Associates in Salt Lake City, Utah, and president of the Salt Lake Board of Realtors, said in an interview.

Utah's unemployment rate was 2.7 percent in January, below the national rate of 4.6 percent, according to the Utah Department of Workforce Services. The average home sales price in Utah in 2006 rose 14 percent to $251,413 from $219,746 in 2005, according to the Utah Association of Realtors.

'Strong Growth'

In December, Wyoming's unemployment rate was 3 percent and Idaho's was 3.2 percent, according to the U.S. Bureau of Labor Statistics. Washington and Oregon lagged at 5 percent and 5.4 percent respectively.

Strength in the energy and mining industries has boosted Wyoming's housing market.

"Wyoming has had strong growth in housing demand because its employment has grown rapidly,'' said Alan Garner, an economist in Denver with the Kansas City Federal Reserve Bank.

Home-price appreciation in Utah lagged behind national rates during the housing boom and now the state is catching up, an economist said.

``That's kind of the phase we're in right now,'' said Mark Knold, the chief economist with the Utah Department of Workforce Services. ``We have one of the best economies in the nation right now.''

Prices in Oregon are also starting to rebound.

Behind the Curve

``We have been kind of behind the curve on the price increases around the nation,'' said Art Kegler, the president of the Oregon Association of Realtors and owner of American West Properties, based in Boardman, Oregon.

Boise, Idaho has seen its population increase as people from Nevada, Arizona, and California, move to the state, said Andy Green of Keller Williams Boise and The Green Group.

Green said the pace of sales has slowed in Boise over the past year and that ``prices have not been appreciating at the rate they were.''

The fastest-growing markets during the five-year real estate boom that ended in 2005 didn't make it to the top 10 in the recent quarter. Florida ranked No. 11, following New Mexico, Montana, and Arizona, and California was No. 35.

Florida prices grew 9.5 percent, slowing from a rate of 27 percent in 2005's fourth quarter. California saw a gain of 4.6 percent, compared with 21 percent a year earlier.

Massachusetts Slowest

New Jersey prices gained 5.8 percent and New York grew 4.9 percent. Massachusetts was the slowest growing state, with a gain of 0.45 percent.

U.S. sales of previously owned homes, which represent 85 percent of the residential real estate market, gained 3 percent to an annualized pace of 6.46 million in January, up from 6.27 million in December, the National Association of Realtors said this week.

"The data shows that, on the whole, prices are still rising, albeit at a much slower pace,'' Ofheo Director James Lockhart said in the report. Prices fell in one U.S. state, Michigan.

New-home sales tumbled 16.6 percent, the biggest loss in 13 years, to an annual pace of 937,000 in January, as builders struggled to sell a glut of houses, the Commerce department said yesterday.

The average rate for a 30-year fixed mortgage this week was 6.18 percent, lower than the 6.24 percent in the year earlier period, according to a report issued today by Freddie Mac, the No. 2 mortgage buyer. The rate probably will average 6.3 percent this year, down from 6.4 percent in 2006, the McLean, Virginia-based company said in a Feb. 8 forecast.

Ofheo's Home Price Index measures changes of values for individual properties using selling prices and appraisals obtained for refinanced home loans. It excludes houses that have 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.

To contact the reporters on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net ; Brian Louis in Chicago at blouis1@bloomberg.net .