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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (52519)	6/3/2002 2:26:25 PM
From: Sully-	Read Replies (2) \| Respond to of 65232

Reuters Market News U.S. home prices resume growth in 1st quarter By Richard Leong NEW YORK, June 3 (Reuters) - U.S. home prices rose in the first three months of the year after a flat previous quarter, suggesting the U.S. housing market is on track for its longest and most robust growth period since the late 1970s, a federal housing agency said on Monday. Average first-quarter U.S. home values rose 1.38 percent in the first quarter from their level at the end of 2001. Fourth-quarter data was revised to show a 0.46 percent increase from the third quarter, for the smallest quarterly gain in five years. Compared with the first quarter of 2001, first-quarter home prices this year climbed 6.05 percent, the Office of Federal Housing Enterprise Oversight said. The agency oversees Fannie Mae (NYSE:FNM - News) and Freddie Mac(NYSE:FRE - News), the largest buyers of home mortgages. The current economic recovery will likely cushion any downward pressure on home prices, OFHEO said. Noting that based on historical experience, "some decline is forthcoming," the agency said: "As housing markets typically perform well in periods of economic growth, the current market characteristics do not suggest comparable declines to those we observed in previous downturns." Home sales, following record levels in 2001 fueled by historic low borrowing costs, were not severely disrupted by the economic slowdown. April sales of new and used homes rose 1 percent and 7 percent, respectively. Rates on 30-year fixed-rate mortgages -- the most popular type of U.S. home loans -- fell last week to their lowest levels in six months, according to Freddie Mac. Average 30-year mortgage rates stood at 6.76 percent for the week ended May 31, down from prior week's 6.81 and the lowest level since Nov. 23, when rates were 6.75 percent. The pickup in home price increases is good news for consumers -- whose brisk spending prevented the economy from sinking into a deep recession. Surging home values enabled homeowners to tap into the equity of their homes to pay off debt or spend it on goods and services. It also offset any stock market losses they may have suffered from Wall Street's protracted slump, economists said. "Any increase in home prices will strengthen the consumers. It has been an underpinning to their spending and wealth," said Gary Schlossberg, senior economist at Wells Capital Management. Based on first-quarter government data, the housing market and related activities accounted for roughly 12 percent of overall U.S. economy, according to Schlossberg. April sales of new and used homes rose 1 percent and 7 percent, respectively. OFHEO publishes its house price index every quarter based on mortgage data compiled by the two mortgage finance government sponsored enterprises. EAST COAST STATES LEAD First-quarter home prices on the East Coast increased more than those in the rest of the country. Among the 50 states and the District of Columbia, East Coast states accounted for nine of the top 10 states where home prices showed the biggest increases in the first quarter versus the same period in 2001. Rhode Island led all states. Average home values there rose 12.08 percent in the first quarter, nearly double the national average, followed by Washington, D.C., where average home prices rose 11.65 percent. At the other end of the spectrum, average prices in Utah registered the smallest increase in the period, up a slim 1.87 percent from a year ago. SILICON VALLEY STILL REELING Of the U.S. 185 metropolitan areas ranked in the survey, San Jose, nervous center of Silicon Valley still reeling from the dotcom bust, finished dead last. Home prices there fell 3.79 percent in the first quarter from a year earlier and down 0.76 from the fourth quarter of 2001. Home values in the neighboring San Francisco fared better, rising 1.31 percent from a year ago and 0.42 percent from the fourth quarter. At the top of the list, home prices in Barnstable-Yarmouth in eastern Massachusetts gained the most, up 13.45 percent in the first quarter from the same period a year ago. The towns of Barnstable and Yarmouth, about 75 miles (120 kilometers) southeast of Boston, are two popular vacation spots in Massachusetts' Cape Cod region. Following closely behind, home price appreciation in the Santa Barbara county in southern California ranked second. Home values rose 12.5 percent from the same 2001 period. The southern coastal community, 92 miles (147 kilometers) north of Los Angeles, is known for its beaches and vineyards. biz.yahoo.com