Home Price Appreciation Forecasted To Remain Up By 5-6% in April

Home price appreciation (HPA) is expected to remain strong through April, according to data from the American Enterprise Institute’s (AEI) Housing Center.

National constant-quality home prices were up 1.1% in February over the month prior and 5.9% from a year ago, the AEI reported.

This is despite the subdued purchase activity and relatively high rates that continue to beset the market. 

It’s a strong sellers’ market, analysts observed, and year-over-year HPA is projected to remain up by five to six percent through April.

YOY HPA in February varied greatly in different markets, ranging from -3.7% in Austin (-6.9% inflation-adjusted) to 12.8% in Indianapolis (+9.6% inflation-adjusted).

Prices appreciated more in the Northeast YOY than the South, at 8.9% compared to 4.5%, respectively.

The decline in the South was largely driven by homes being sold at a discounted rate in Florida metros due to Hurricanes Ian and Nicole. To help ensure constant home quality, AEI excluded homes that sold for less than 55% of the property’s Automated Valuation Model (AVM) when estimating the constant quality HPA in these particular metros.

While the West was hit the hardest by rising rates in early 2023 (-3.7% YoY HPA in April), its HPA has now recovered to 5.1% on a year-over-year basis.

Historically, the low price tier HPA has outpaced those in the upper price tiers. This trend continued in February, with the YoY HPA up 7.2% for the low-price tier and 4.5% for the high price tier.