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New evidence of a housing market slowdown emerged Tuesday - growth in the price of a single family home was just 1.17 percent in the second quarter, a decline of more than one percentage point from the prior quarter when prices grew 2.20 percent. The Office of Federal Housing Enterprise Oversight (OFHEO), which released the report, said it was the slowest quarterly increase since the fourth quarter of 1999 and was the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975. |
OFHEO’s numbers are generally regarded as the most accurate gauge of housing prices. Instead of measuring the average sale prices of homes, it compares repeat sale prices of the same single family homes. Even so, according to Jonathan Miller of Miller Samuel, an appraiser in New York, the slowdown may be even more pronounced than the numbers are showing. “The index may not reflect what’s really happening out there,” he said. Miller thinks that many sellers are holding out for unrealistically high asking prices, and the buyers actually purchasing homes are only the ones willing to pay those higher prices. “That’s why there’s been such a drop-off in volume,” says Miller. In a normal market those sellers would more readily accept lower bids but, conditioned to oversized price increases, they are reluctant to abandon their asking prices.
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