Home prices are still going up, but nearly not as much as they were when interest rates were lower.
Fannie Mae’s latest Home Price Index (FNM-HPI), released Tuesday, indicates that single-family home prices increased from Q1 2022 to Q1 2023 at a non-seasonally adjusted annual rate of 4.7%, down from the previous quarter’s revised annual growth rate of 8.6%.
Home prices rose 1% on a seasonally adjusted quarterly basis in Q1 2023, above the 0% growth in the quarter prior.
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“As expected, the annual rate of increase in home prices has slowed dramatically in response to the rapid and significant increase in interest rates,” said Fannie Mae Senior Vice President and Chief Economist Doug Duncan. “Still, the fact that prices rose slightly in the first quarter is evidence of significant pent-up mortgage demand, despite ongoing affordability constraints.”
The FNM-HPI measures the average quarterly price change for all single-family properties in the U.S., excluding condominium units. This series is released publicly during the first month of each quarter, beginning with Q1 1975 to the present.
“Even though mortgage rates remain elevated compared to the previous few years, the acute lack of housing supply remains supportive of home prices,” Duncan pointed out. “Of course, the shortage of homes for sale is currently being exacerbated by the so-called ‘lock-in effect,’ which continues to disincentivize huge numbers of households with low mortgage rates from listing their homes.”
As of Wednesday, April 19, the average interest rate for a 30-year fixed mortgage is 6.93%, up six basis points over the week prior. The vast majority of outstanding mortgage debt is locked-in at a lower rate.
