Mortgage Rates Tick Down

In Freddie Mac's Primary Mortgage Market Survey the 30-year fixed-rate mortgage (FRM) averaged 6.26%, with an average 0.6 point, for the week ending December 22, 2005. Last year at this time, the 30-year FRM averaged 5.75%. "Long-term mortgage rates dipped because of recently released inflation indicators for November," said Frank Nothaft, Freddie Mac vice president and chief economist. "Although mortgage rates by and large are higher than they were at the start of this year, they've only risen about one percentage point since hitting a four-decade record low in June of 2003."

House price inflation slows here, report says

St. Louis area housing prices rose more slowly in recent months after hitting their peak increases between mid-2004 and mid-2005, according to a recently released federal report. The quarterly report found that housing prices in the St. Louis metropolitan area increased 7.1 percent in the 12-month period that ended Sept. 30.That's down from 9.4 percent in the 12-month period that culminated at the end of June. It's also the lowest such increase in five quarters. "I don't think we'll see any backwards trend, but in the future you're just not going to see the same kinds of price increases that you did the past few years," said Mike Travaglini, president of the St. Louis Association of Realtors for 2005 and a branch manager at Coldwell Banker-Gundaker's office in south St. Louis County. "I do think it will stay strong, but just not at the same rapid pace we've seen." The latest edition of the Housing Price Index report was released earlier this month by the Office of Federal Housing Enterprise Oversight. The index measures changes in prices nationwide, in each state and in 265 metropolitan areas. The Phoenix area saw the highest rate of increase - 34.4 percent - in the 12-month period ended Sept. 30. None of the metro areas saw prices fall during the period. Mansfield, Ohio, experienced the slowest 12-month increase at 0.8 percent. In St. Louis, housing prices generally have followed national trends over the last several decades, but the swings have been less dramatic. In the last three decades, the region has seen prices fall in two years. St. Louis ranked 154th of the 265 areas during the 12-month period ended Sept. 30.The nation, too, is seeing a moderation in the rate that prices are rising, with its increase of 12 percent the lowest level in four quarters. "We may have hit some constraints in people's ability to pay, and at the same time we're seeing increases in the housing supply," said Patrick Lawler, chief economist at the Office of Federal Housing Enterprise Oversight. "Particularly on the coasts, we're seeing smaller increases." The housing price boom of the last few years has been fueled by interest rates that reached historic lows and by investors' increased appetite for real estate.But as 2005 began, many experts were predicting an end to the ongoing wave of price growth - or maybe even a fall in prices in some parts of the nation. Lawler also points out that a recent run-up in mortgage rates could further slow house price appreciation next year. It's now in doubt whether this year will even top 2004 in St. Louis in terms of housing price increases. At the current pace, 2005 would come out behind.Still, the year easily will continue the St. Louis area's run of 14 straight years of housing price appreciation. In general, the Midwest is seeing less slowing in prices than coastal areas in the most recent quarter, said Andrew Leventis, another economist with the Office of Federal Housing Enterprise Oversight. "Your part of the country has held fairly constant. Not constant in prices, but constant in growth rates," he said. Of the top 20 metropolitan areas in the most recent index, 11 were in Florida. Notably absent from the list were areas in Nevada, where appreciation apparently has slowed dramatically. In recent years, places such as Las Vegas topped the list. Parts of Michigan and Indiana were prevalent in the bottom 20 areas. Jefferson City also was on that list. Among states, Illinois ranked 30th and Missouri ranked 39th.
St. Louis' rankings
The St. Louis area ranked 154th among 265 metropolitan areas in a federal index measuring house price increases during the 12-month period that ended Sept. 30. Some areas in the index are:
Phoenix 34.4%
Los Angeles 18.8%
U.S. average 12.0%
Chicago 9.1%
Boston 7.2%
St. Louis 7.1%
Cleveland 4.1%
Detroit 2.5%

By Eric Heisler
ST. LOUIS POST-DISPATCH
12/15/2005