House prices increased at a 13% annual rate in 2005, according to the Office of Federal Housing Enterprise Oversight, as record home sales pushed up house prices."Despite recent indications that a slowdown may be forthcoming, house price appreciation during 2005 continued to hover at near-record levels," said OFHEO chief economist Patrick Lawler. The annual rate of house price appreciation in the fourth quarter was 12.95%, according to OFHEO's house price index, up from 12.05% in the fourth quarter of 2004. However, quarterly price appreciation declined to 2.86% in the fourth quarter from 3.14% in the third quarter. While price increases are decelerating in some areas, "appreciation generally is still strong," Mr. Lawler said. "Mortgage rates climbed significantly during the second half of last year, but the effect of that on price appreciation so far appears to be limited."

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