Home prices in the United States continued to rise in September and the third quarter, but lower home affordability should not be overlooked, as the gains in price appreciation appear to be slowing.
According to the latest Federal Housing Finance Agency report, home prices increased 0.3 percent on a seasonally adjusted basis in September compared to the previous month. That is tied for the slowest pace in almost a year. However, the House Price Index has now logged 19 consecutive monthly price increases.
The FHFA index is based on single-family homes with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. The index does not provide specific prices for homes, but the index has not posted a decline in national home prices on a monthly basis since January 2011.
In the third quarter, home prices increased 2 percent from the previous quarter. The FHFA’s expanded-data index — which includes transaction information from county recorder offices and the Federal Housing Administration — posted a gain of 2.2 percent for the third quarter.
Home prices have now posted an increase for nine consecutive quarters, and the FHFA index is higher than it was five years ago for the first time since 2009. Over the past four quarters, the index is up 8.8 percent.
“Overall, the housing market experienced another strong quarter, but price appreciation in the latter part of the quarter was relatively subdued,” said FHFA principal economist Andrew Leventis. “Price increases in August and September of 0.4 and 0.3 percent, respectively, were notably below appreciation rates observed earlier this year and in late 2012.”
The FHFA index rose in 48 states and in the District of Columbia during the third quarter. As the chart below shows, the advance in September was led by a 19.2 percent surge in the Pacific region (Hawaii, Alaska, Washington, Oregon, and California) year-over-year. Prices in the Mountain region jumped 11.6 percent, and the South Atlantic region gained 8.6 percent from a year earlier. The Middle Atlantic was the weakest region, with a yearly gain of only 2.9 percent.
In a separate report, the S&P/Case-Shiller composite index of 20 metropolitan areas, which is a three-month average, jumped 13.3 percent year-over-year in September. That is the strongest gain for the index since February 2006. However, 19 cities decelerated month-over-month form August to September.
Follow Eric on Twitter @Mr_Eric_WSCS