House Prices Continue to Move Up Despite Headwinds
Home prices have moved up for 20 consecutive months including a 0.3% increase from August to September, according to the Federal Housing Finance Agency.
The agency’s seasonally adjusted housing price index, which is based on Fannie Mae and Freddie Mac purchase mortgage transactions, is up 8.5% from a year ago.
“It marks the first time since 2009 that the national house price level is higher than it was five years ago,” according to FHFA economist Andrew Leventis. FHFA released its HPI Tuesday morning.
S&P Dow Jones also released the Case-Shiller HPI Tuesday morning and it shows that prices rose 0.7% in September following a similar increase in August.
The 20-city Case-Shiller HPI is up 13.3% from September 2012 on a non-seasonally adjusted basis. The HPI hit its lowest level in March 2012 and since then it is up nearly 23%.
IHS Global Insight Economists Patrick Newport and Stephanie Karol contend that strong demand for housing and the low number of houses for sale is supporting house prices.
But “credit is tight, flood insurance rates are on the rise, mortgage rates are elevated relative to the first half of the year, and income growth has not kept pace with price growth,” they said. “We expect home prices to decelerate, but growth should continue into next year.”