Home Price Growth Decelerated In 3Q

Growth in home prices hit the brakes in the third quarter, falling nearly 14%, as mortgage rates continued to climb, according to a report from Fannie Mae.

Single-family home prices increased at a non-seasonally adjusted annual rate of 13.8% in the quarter, according to Fannie Mae’s latest Home Price Index (FNM-HPI) reading. That was down from the previous quarter’s revised 19.1% annual rate.

On a quarterly basis, home prices rose 0.2% on both a seasonally adjusted and non-seasonally adjusted basis in the third quarter, the slowest quarterly growth since the fourth quarter of 2011, Fannie Mae said.

“Year-over-year home price growth decelerated in the third quarter, as the sharp rise in mortgage rates — and declining housing affordability — appears to have weighed further on demand,” said Doug Duncan, Fannie Mae's senior vice president and chief economist. “In addition to the greater affordability constraints for potential homebuyers, many existing homeowners likely feel ‘locked-in’ to their existing, lower interest-rate mortgages.”

“This contributes to fewer homes being listed," Duncan continued, "as well as fewer potential buyers, and may lead to a growing share of listings having to cut prices to meet the reduced demand."

He added that the supply of completed, new single-family homes for sale has begun to rise, "suggesting that homebuilders may also need to begin offering greater price concessions to move inventory. We expect these trends to continue in the coming months.”