The Federal Housing Finance Agency (FHFA) House Price Index found a 5.5% increase in house prices between the third quarter of 2022 and the third quarter of 2023. It was one of three indexes released Tuesday to find similar increases, driven largely by a low supply of homes.
According to the FHFA, house prices also rose by 2.1% when compared to the second quarter of 2023. The FHFA's seasonally adjusted monthly index for September showed a 0.6% increase from August.
In the third quarter, house prices experienced positive annual appreciation in all census divisions, with the New England division recording the strongest growth at 9.2%, while the Pacific division posted the smallest increase at 2%.
“U.S. house price growth continued to accelerate in the third quarter, appreciating more than in each of the previous four quarters,” said Dr. Anju Vajja, principal associate director in FHFA’s Division of Research and Statistics. “House prices rose in the third quarter in all census divisions and are higher than one year ago, driven primarily by a low supply of homes for sale.”
Other indexes like the S&P CoreLogic Case-Shiller Indices showed a 3.9% annual increase in September, up from a 2.5% change in the previous month. Several cities, including Detroit and San Diego, reported significant year-over-year gains.
The national composite has risen by 0.3% in September, marking eight consecutive monthly gains since prices bottomed in January 2023. The composite now stands 3.9% above its year-ago level and 6.6% above its January level.
First American Data & Analytics’ Real House Price Index, which measures the price changes of single-family properties throughout the U.S., also showed an annual increase.
“In September 2023, the RHPI jumped up by 15 percent on an annual basis, dragging housing affordability to the lowest point in over three decades,” said Mark Fleming, chief economist at First American. “Two factors drove the sharp annual decline in affordability – a 6.2 percent annual increase in nominal house prices, according to our First American Data & Analytics House Price Index, and a 1.1 percentage point increase in the 30-year, fixed mortgage rate compared with one year ago."
Fleming said the only way to mitigate the loss of affordability is to increase household income.
“Even though household income increased 3.1 percent since September 2022 and boosted consumer house-buying power, it was not enough to offset the affordability loss from higher rates and rising nominal prices. Looking ahead to 2024, what will happen to income, interest rates, house prices and affordability?”
Redfin, the latest company to get into the home pricing game found that prices climbed roughly 1% from September to October.
Nationwide, according to the Redfin Home Price Index, home prices rose 0.7% month over month in October to a record high. Monthly price growth is now on par with pre-pandemic levels following a pandemic rollercoaster ride that sent price growth soaring and then tumbling. On a year-over-year basis, prices climbed 6.1% in October, the largest annual increase since the start of 2023.
In Pittsburgh, prices climbed 1.8% month over month in September, the largest monthly jump among the 50 most populous metros. Next came Virginia Beach, VA (1.7%), Boston (1.5%), Columbus, OH (1.5%) and West Palm Beach, FL (1.4%).
Twelve metros saw monthly price declines, with the largest drops in Austin, TX (-1.5%), San Francisco (-1.3%), San Antonio (-1.1%), Cincinnati (-1%) and Philadelphia (-0.9%).
