MONTPELIER -- Vermont is the only state in the nation that saw a drop in housing prices for single family homes in the four quarters leading up to winter 2014, according to the federal Housing Price Index.
The value of single-family homes dropped about 1.24 percent between the first quarter of 2014 and the same period a year ago. Prices have shrunk by 1.32 percent since 2009.
Meanwhile, Vermont's gross state product has grown 12 percent since the second quarter of 2009, according to a new report from the federal Bureau of Economic Analysis.
The state's overall economy emerged from the recession faster than other New England states.
The housing price index and the gross state product point in different directions because real estate cycles tend to lag behind other facets of the economy, according to Tom Kavet, the Legislature's consulting economist.
"This is simply the way real estate works," Kavet said.
Kavet said long planning cycles for real estate contribute to a lag in the market. While a drop or spike in oil prices, for example, can be accommodated quickly in the the price of goods, real estate signals take longer to gel.
"When the market changes, if you've got 50 or 100 buildings under construction, you can't stop," Kavet said. "That's why cycles are longer, then the swings are more erratic -- both up and down.
Kavet and Jeff Carr, the governor's economist, took the grim housing index, along with several other factors, into consideration when they downgraded the state's revenue forecast in July.
The drop in housing prices at the beginning of 2014 is "of concern," Kavet said, and they'll be watching closely to see if it continues to decline for the rest of the year. "Even one more quarter would add to the concern," he said.
But a low ranking on the nation's housing price index is not unique among New England states, he said. And it wasn't entirely unexpected. It's part of the reason property taxes have continued to climb, according to Mark Perrault, an analyst with the Joint Fiscal Office.
"The Grand List has not rebounded," Perrault said. "And we're not expecting it to next year, either."
Staige Davis, CEO of Lang McLaughry Real Estate, sees the housing price index decline as a warning sign.
"It's not a wonderful market," Davis says.
He agrees with analysts who point out that Vermont's real estate market doesn't have as much ground to gain because the state's housing prices didn't fall as far as many other states during the recession. But that doesn't allay his concerns about the uncertainty he's seeing among buyers. He also said a high number of homes are for sale.
Despite depressed home sales prices, one of the biggest sectors contributing to Vermont's economy remains real estate, rentals and leasing. Overall, the sector has grown 39 percent in a decade and 22 percent since 2009. The sector was $3.03 billion in 2005, and grew to $4.21 billion in 2013.
Vermont's gross state produce has grown 12 percent since the second quarter of 2009. That rate narrowly outpaces Massachusetts at 11 percent, and it dwarfs Connecticut and Maine, where business has inched up just 3 percent since June 2009, the official start of the recovery. New Hampshire's economy grew by 9 percent, and Rhode Island's by 6 percent in the same time period.
Vermont's rate of growth is much lower when compared with the state's economic peak in 2005. The gross state product grew 8 percent from 2005 to 2013, according to the BEA report. Massachusetts, by comparison, grew 13 percent over that same period. New Hampshire comes in third place in the region, with 6 percent growth. Connecticut, Rhode Island and Maine posted 4 percent, 2 percent and 1 percent growth, respectively, since 2005.