Resale Home Prices Surge at 5.8% Rate

third quarter, Freddie Mac and Fannie Mae reported. The number represented an acceleration of an uptrend. Prices rose only 4% in the 12 months through September. The report by the two housing finance agencies said every area of the country experienced price appreciation in the quarter, with the East South Central region leading the way at an 8.7% annual rate and Mountain at 7.5%. Bawo Ayomike, senior financial analyst at Freddie Mac, said low interest rates may be helping to spur the market in some regions - but he pointed to the strength of the economy as the major factor overall. "For the first time in a long time, we've had a gain in every division," he declared, referring to the country's 10 statistical regions. "As we've noted from time to time in the recent past, the economies in the East North Central, Mountain, and East South Central areas have been booming and continue to grow," Mr. Ayomike said, adding: "But New England and Pacific have been in a slump lately and have turned around quite a bit." The figures from Fannie Mae, formally the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp., are considered especially accurate since they are derived from actual sales of houses whose mortgages had previously been held or sold by the companies. In a separate development, Case Shiller Weiss Inc., a Cambridge, Mass., consulting firm, has also begun to provide figures on home-price appreciation based on comparisons with previous sale prices. Its first report provides second-quarter figures, but future reports will be monthly, the firm says. In describing its findings through the second quarter, Case Shiller said: *U.S. prices have risen 6.5% since 1990. *The gain for the second quarter of this year was about 1.5%, or 6% annualized. *Prices in the Pacific region were still down for the year despite a gain in the second quarter. *Homes in the Miami area sold for about 20% more in the second quarter than in 1990, the base year for the indexes. By contrast, prices in the New York City area, at 99.2, have not quite returned to their 1990 level. Karl E. Case, a Case Shiller founder, noted that interest rate rises by the Federal Reserve last year caused a runup in mortgage interest rates in late 1994 and the first quarter of this year. "During the second quarter, mortgage rates softened, but that probably had little effect on home prices," he declared, adding that "the modest price increases recorded during the second quarter of 1995 were likely the result of normal seasonal demand." He also noted that while the New York City area was only back to where it was in 1990, it had one of the biggest quarterly gains for any metropolitan area in this year's second quarter.