FHFA: Homes are becoming slightly more affordable

Mortgage

Home prices across the U.S. increased in the second quarter, but the pace is slowing, and homes are slowly starting to become more affordable.

Home prices rose 1.2% from the first quarter this year, and 5.6% from the second quarter last year, according to the Federal Housing Finance Agency House Price Index. FHFA’s seasonally adjusted monthly index for June increased 0.2% from May.

The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

While home prices rose 5.6% from last year, prices of other goods and services remained unchanged. The inflation-adjusted price of homes rose approximately 5.7% over the last year.

“Although the appreciation rate for the second quarter was of similar magnitude to what we’ve been seeing for several years now, a close look at the month-over-month price changes during the quarter reveals a potentially significant market shift,” said FHFA Supervisory Economist Andrew Leventis.

“Our monthly price index indicates that in each of the three months of the quarter, the increase was only 0.2%,” Leventis said. “This is a much more modest pace of appreciation than we’ve seen in some time and most likely reflects accumulated pressures from significantly reduced home affordability.”

The June increase of 0.2% fell slightly below economists’ predictions of 0.3%, according to an article by Akin Oyedele for Business Insider.

While home prices are rising at a slower rate, they still rose year-over year in every state except Vermont.  The top five states in annual appreciation were:  Oregon with 11.7%, Washington with 10.3%, Colorado with 10.2%, Florida with 10% and Nevada with 9.6%.

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