U.S. home prices were up 1.4 percent in the fourth quarter of 2012 compared to the third quarter the Federal Housing Finance Agency (FHFA) said today.  FHFA's seasonally adjusted purchase-only house price index (HPI) rose 5.5 percent on a seasonally adjusted basis compared to the same quarter in 2011 and was up 0.6 from November to December.

The cost of other goods and services rose 1.7 percent in 2012, so the purchase prices of homes in the HPI measure were up at triple that rate.  When adjusted for inflation, the annual increase in home prices in 2012 was 3.7 percent.

The HPI rose in December in seven of the nine census divisions.  The South Atlantic division showed no change from November and the Middle Atlantic division was down 0.1 percent.  On an annual basis there were increases in every division.  The Mountain and Pacific divisions made the strongest improvements with increases of 14.7 percent and 12.6 percent respectively.  The seasonally adjusted HPI rose in the fourth quarter in 38 states and the District of Columbia.   

"The fourth quarter was another strong one for house prices, as it was the third consecutive quarter where U.S. price growth exceeded one percent," FHFA Principal Economist Andrew Leventis said.  "While a significant number of homes remained in the foreclosure pipeline, the actual number of homes available for sale was very low and fell over the course of the quarter."

FHFA noted that there is a recent gap between the home price appreciation reflected in the purchase-only index and the all-transactions metric.  The latter index incorporates appraisals from refinancing and has shown very modest growth relative to the purchase only index.  FHFA is analyzing this discrepancy.

FHFA's purchase only HPI is based on price changes in repeat sales on the same single-family properties.  More than 6 million repeat sales transactions are covered in the index based on data obtained from Fannie Mae and Freddie Mac mortgages originated over the past 38 years.

In a separate release FHFA reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders was 3.35 percent in January, an increase of 6 basis points from December.  The average rate on conventional 30-year fixed-rate mortgages (FRM) increased 6 basis points to 3.53 percent.  This rate reflects market conditions prevailing in mid-to-late December.

The contract rate on the composite of all loans - fixed and adjustable rate - was 3.34 percent compared to 3.28 percent in December and the effective rate was 3.46 percent, up 4 basis points from December.

Initial fees and charges were an average of 0.95 percent of the loan balance in January, down 20 basis points.  Twenty-six percent of loans for home purchases originated in January were no-point mortgages, up from an 11 percent share in December.  Loan terms averaged 27.1 years, down 0.3 years from the previous month and the average loan amount was $254,700, a drop of $19,400 from December.  The average loan-to-value ratio was 76.4 percent.