U.S. Home Prices Continue to Climb

U.S. home prices continued to increase in the third quarter of 2017 by 1.4 percent, according to the Federal Housing Finance Agency’s (FHFA) House Price Index (HPI). The index, which is calculated with home prices from mortgages sold to and guaranteed by Freddie Mac and Fannie Mae, depicts a 6.5 percent uptick from the third quarter of 2016 to the third quarter of 2017.

“With relatively favorable economic conditions and a continued shortage of housing supply, price increases in the third quarter were generally robust and widespread,” stated FHFA Deputy Chief Economist Andrew Leventis. “At some point, declining housing affordability should temper appreciation rates in some of the nation’s fastest appreciating markets, but our third quarter results show few signs of that.”

House Price Index Findings

  • The top 5 states with highest home price increases in the last year are: District of Columbia (11.6 percent), Washington (11.5 percent), Hawaii (10 percent), Arizona (10 percent), and Nevada (9.6 percent)
  • Seattle-Bellevue-Everett, WA (MSAD) is the city with the most price growth in the last year (14.6 percent); Camden, NJ (MSAD) is the city where prices rose least (.5 percent)

Although these rising home prices pose a challenge to potential homebuyers, they will be partially offset by decreasing mortgage rates and increased loan limits for Fannie and Freddie. The FHFA reports that the average interest rate on all mortgage loans in October dropped two basis points to 3.97 percent, and for conventional, 30-year, fixed-rate mortgages of $424,100 or less, it dropped three basis points to 4.11 percent.

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