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Last Updated: Wednesday, 1 March 2006, 17:34 GMT
US house prices power on in 2005
Houses in San Francisco
Mortgage rates are taking their toll on the housing market
US home prices rose 12.95% on average in 2005, despite a string of mortgage rate rises, says the Office of Federal Housing Enterprise Oversight (OFHEO).

Home values in the fourth quarter were up 2.86% on the previous period, at an annualised rate of 11.4%.

Analysts have been predicting that the five-year US housing boom is slowing.

But despite indications of a slowdown, "house price appreciation during 2005 continued to hover at near-record levels," said OFHEO in a statement.

'Appreciation strong'

The US house price boom has been fuelled by low interest rates over recent years, which has led to increased buying of second homes for vacation, retirement or investment.

This week, the Commerce Department said the number of home sales fell in all regions of the US except the West, where they rose by more than 11%.

And the OFHEO's chief economist Patrick Lawler said on Wednesday: "While [price] deceleration continues in some areas, appreciation generally is still extremely strong.

"Mortgage rates climbed significantly during the second half of last year, but the effect of that increase on price appreciation so far appears to be limited."

Arizona posted the greatest gains during the year as prices soared 34.9%, more than 8 percentage points above the gains in second-placed Florida.

Also, price growth along the east coast from Maryland to Florida was at its highest for 30 years. The slowest rate of house price growth was in the East North Central division, which includes Michigan, Wisconsin, Illinois, Indiana and Ohio.

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