U.S. average house prices rose 3.2 percent in the second quarter from a year ago, representing the slowest appreciation in a decade, the Office of Federal Housing Enterprise Oversight said Thursday.
Compared with the first quarter of 2007, house prices increased by 0.1 percent, the smallest rise since the last part of 1994, the regulator of home finance companies Fannie Mae and Freddie Mac said on its Web site.
Slowing home price appreciation -- or price declines by other measures -- have fueled speculation the housing slump may inhibit economic growth to a point of recession. Downward pressure on house prices will likely continue well into 2008, given soaring numbers of homes for sale and a sharp reduction in available credit by lenders in recent months, economists said.
"Our belief is that home prices will continue to slow over the next three to four quarters," said Scott Anderson, Minneapolis-based senior economist with Wells Fargo & Co., the No. 2 U.S. mortgage lender. Rising inventories and slack demand will put pressure on homeowners to "bite the bullet" and lower prices, he said.
Another index of home prices favored by some Wall Street economists this week found that home prices suffered their worst decline in the second quarter since its creation 20 years ago. The S&P/Case-Shiller U.S. National Home Price Index, which measures purchase prices registered at county offices, fell 3.2 percent in the period.