Annual home price rise slowest since 1995

By Lynn Adler

NEW YORK (Reuters) - Home prices posted the first quarterly drop in 13 years in the third quarter, dragging down annual price appreciation to the slowest pace since 1995, the Office of Federal Housing Enterprise Oversight said on Thursday.

Compared with the second quarter of 2007, house prices fell 0.4 percent, the government regulator said in a statement on its Web site. The annual price increase slowed to 1.8 percent, the lowest four-quarter rise since 1995.

"While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country," OFHEO Director James Lockhart said in the statement.

"Indeed, in the third quarter, more than 20 states experienced price declines and in some cases those declines are substantial," he said.

Prices dropped in 10 states over the last four quarters, the largest number of states posting declines since the 1996-1997 period.

Many cities and states where prices are slumping the most had staged the biggest price surges earlier in the decade, OFHEO said.

"Rising inventories of for-sale properties are clearly having a material impact on home prices," OFHEO Chief Economist Patrick Lawler said in the statement. "Until those inventories shrink, that will be a great source of resistance to price increases."

Home foreclosures are boosting the supply of unsold homes and also pressing on prices.