U.S. home prices rose in the second quarter, but the pace of growth was down sharply from the prior year, the Office of Federal Housing Enterprise Oversight reports.
Average home prices rose 1.17% the quarter but that was vs. a 3.65% gain in 2005's second quarter -- the decline in price growth was the biggest since the federal regulator started keeping track of home prices in 1975.
"These data are a strong indication that the housing market is cooling in a very significant way," OFHEO Director James B. Lockhart said in a statement. "Indeed, the deceleration appears in almost every region of the country."
The data is the latest evidence suggesting the housing boom is over. Sales of new homes dropped by 4.3% in July, the largest decline since February, while the inventory of unsold homes hit a record high. Also, sales of previously owned homes fell 4.1% in July to the lowest level in more than two years. Meanwhile, homebuilders such as
have continually reduced their expectations for earnings and sales growth this year.
That said, long-term mortgage rates fell for the week ended Aug. 31, the sixth consecutive weekly decline. The average 30-year fixed-rate mortgage was 6.44% as of Aug. 31, according to Freddie Mac.