U.S. Home Prices See Significant Increase in Second Quarter

08.26.2016 | U.S. Home Prices See Significant Increase in Second Quarter – Rusty Tweed team

FHFA Report Shows Home Prices Rising Higher than Expected

The second quarter saw a 5.6% increase in U.S. home prices from the previous year, creating concerns about affordability for buyers.

According to a Federal Housing Finance Agency (FHFA) report issued earlier this week, prices increased 1.2% (on a seasonally adjusted basis) from the previous three months. The Federal Housing Finance Agency said that June prices climbed 0.2 on a seasonally adjusted basis from May.

21 economists had forecast a 0.3% gain, including Andrew Leventis, the agency’s supervisory economist.

“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,”  Leventis said in a statement. The increase was only 0.2% in each of the three months, a more modest appreciation rate that “most likely reflects accumulated pressures from significantly reduced home affordability.”

U.S. Home Prices See Significant Increase in Second Quarter - Rusty Tweed team

Significant FHFA Report Findings
  • In every U.S. state, except Vermont, home prices rose between the second quarter of 2015 and the second quarter of 2016.  The topmost five states in annual appreciation were:  1) Oregon 11.7%; 2) Washington 10.3%; 3) Colorado 10.2%; 4) Florida 10.0%; and 5) Nevada 9.6%.
  • Among the U.S.’s 100 most populated metropolitan areas, annual price increases were highest in North Port-Sarasota-Bradenton, FL, which saw prices rise by 15.7%.  Prices were at their weakest in Bridgeport-Stamford-Norwalk, CT, where they dropped by 3.3%.
  • Of the nine census divisions, the strongest increase in the second quarter was seen in the Mountain division, posting a 1.9% quarterly increase and an 8.1% growth on the second quarter of last year.  House price appreciation was at its lowest in the Middle Atlantic division, where prices rose a mere 0.6% from the last quarter.

The FHFA index measures transactions for single-family properties financed with mortgages owned or securitized by government-sponsored Fannie Mae and Freddie Mac. It does not provide prices.

National Association of Realtors Report Shows Home Price Growth is Most Significant in Metro Areas

The latest report from the National Association of Realtors issued earlier this month also showed home prices hanging onto their forceful, upward trajectory in most metro areas during the second quarter. The rise in home prices is a factor in the decline of affordability in spite of mortgage rates currently hovering at their lowest in more than three years.

In the U.S., prices have overall risen as the demand for housing has outstripped supply. The second quarter saw a total of 5.5 million homes, including single-family houses and condominiums, change hands, up 4.2% from a year earlier, according to the National Association of Realtors. The transactions are from a dwindling group of available properties. 2.12 million homes were listed for sale at the end of the quarter, down 5.8%, the NAR said.

The national median price of an existing single-family home rose to $240,700 in the second quarter, up 4.9% from a year earlier. The report also revealed that for the very first time, a metro area (San Jose, California) had a median single-family home price higher than $1 million.

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