The national housing boom may be losing its momentum, but in Utah County, real estate still sizzles amid expectations of a possible slowdown in 2007.

The median sale price of a single-family home in Utah County jumped more than 20 percent to $198,650 in August from $164,900 a year ago. In September, the median sale price is $221,900.

That compares with a mere 2.3 percent annual appreciation in Utah's home prices from 1999 through 2005. The median price is the point between the least expensive and most expensive home sold in an area during a given period of time.

Driving the jump in Utah's home values are bargain hunters from more expensive real estate markets such as California, Nevada and Arizona following reports that Utah is one of the most undervalued in the nation, according to Kevin Call, executive vice president of the Utah County Association of Realtors.

Lower housing inventory, attractive interest rates, population and in-migration growth, and a healthy local economy also fueled home prices in Utah County, Call said at the Utah Valley Executive Summit at Sundance on Thursday.

"The ratio of closed sales to active properties averaged 20-21 percent for the past six months, compared with 15 percent two years ago," Call said. "Utah County's housing inventory is 14 percent lower in August from two years ago, while unit demand is up 29 percent in the same period.

"But we can't sustain 20 percent price appreciation in Utah County for very long, especially when wage growth isn't as strong. Eventually prices will soften, but we're not seeing signs of it yet," he said.

Northern Utah County showed the biggest jump in home price appreciation, because of its proximity to employment bases in both Salt Lake and central Utah counties, Call said.

Median sale prices in Saratoga Springs showed the biggest increase, jumping more than 42 percent to $250,000 in August from $175,078 a year ago.

Elk Ridge City saw a 41 percent jump in median home prices to $369,900 from $263,000 a year ago, while median home prices in Pleasant Grove gained 32 percent to $214,000 from $162,675 a year ago. In Lehi, median sale prices jumped 30 percent to $229,900 from $176,250 a year ago, while in Provo, prices gained 10 percent to $172,450 from $156,500 a year ago.

Sharon Spratley, president of the Salt Lake Board of Realtors, described the 20 percent jump in median home prices in Utah County as being in a "stable growth range," compared with some major metropolitan areas in the country, which saw triple digit gains in recent years.

With land prices and housing costs rising faster than wages in Utah County, affordability is becoming a key issue for many first-time buyers. Only 5.6 percent of available single-family homes in Utah County cost less than $160,000.

"Some cities in Utah County are starting to approve new housing formats that allow higher density, and may hold in check the ever increasing costs of housing. Mixed-use developments, planned communities offering a mix of density and housing choices will be beneficial," Call said.

As long as interest rates remain at the 6-7 percent level, that should help offset higher home prices, he said.

But if interest rates climb to the 8 percent level, affordability may become an issue, said David Irwin, vice president of sales and marketing for Hamlet Homes.

The Murray-based property developer is in the process of selling Devon Glen, a 136-unit, single-family home community in Springville. Hamlet Homes has built five other residential communities in Springville, Saratoga Springs and Eagle Mountain.

"We're averaging six to seven sales a month at Devon Glen. We have 15 lots left. Our home prices have jumped 30 percent in the first half of 2006 from a year ago because land costs have risen dramatically," he said. "The average lot in Springville, which cost $55,000 in 2004, is now valued at $125,000."