Catherine Reagor
The Arizona Republic
Nov. 10, 2005 05:07 PM

Metropolitan Phoenix home prices dipped slightly in October, signaling the housing market has likely peaked.

The median price of an existing house inched down 1 percent in October to $259,900, according to the Arizona Real Estate Center at Arizona State University’s Polytechnic. The median Valley home price was $263,000 in September.

“The housing market is returning to normal,” said Jay Butler, director of the Real Estate Center. “It was bound to happen.”

This the first monthly drop since December 2003, right before housing prices started their meteoric rise. The price of a used Valley home is up 44 percent since October 2004.

Metro Phoenix’s housing market led the nation for price jumps during the past year. Investors, move-up buyers, new residents, second-home buyers and first-timers all jumped in and paid high prices.

But housing analysts don’t expect Valley home prices to continue to fall and are calling for double-digit appreciation gains next year.

Valley resales were also down last month, but the market is still on track to break last year’s record. There were 8,420 existing-home sales in October, down from 9,815 in September.

Through October, 97,165 used home have changed hands, compared with 84,555 for the same period last year.

Mortgage rates began to climb in September, which could account for some of the housing market’s slowing.