FHFA HOUSE PRICE INDEX RISES 0.7%, FASTER THAN EXPECTED

U.S. housing prices grew in June, with the FHFA House Price Index rising to 0.7%, beating expectations of 0.6%.

Prices rose 2.1% in Q2 from the previous quarter, the eighth consecutive quarterly price increase, according to the report.

Homebuilder confidence has surged this year, but some economists are beginning to expect the pace of home prices will cool off soon as the impact of rising mortgage rates permeate.

Here’s the full release:

Washington, D.C. — Upward momentum in U.S. house prices remained strong in the second quarter, as prices rose 2.1 per cent from the previous quarter, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the eighth consecutive quarterly price increase in the purchase-only, seasonally adjusted index.

“The housing market experienced one of its strongest quarters since the boom in the middle of the last decade,” said FHFA Principal Economist Andrew Leventis. The HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac. Compared with last year, house prices rose 7.2 per cent from the second quarter of 2012 to the second quarter of 2013. FHFA’s seasonally adjusted monthly index for June was up 0.7 per cent from May.

FHFA’s expanded-data house price index, a metric introduced in August 2011 that adds transaction information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 2.4 per cent over the latest quarter. Over the last four quarters, that index is up 7.5 per cent. For individual states, price changes reflected in the expanded-data measure and the traditional purchase-only HPI are compared on pages 31-33 of this report.

The seasonally adjusted, purchase-only HPI rose 7.2 per cent from the second quarter of 2012 to the second quarter of 2013 while prices of other goods and services rose only 1.0 per cent. The inflation-adjusted price of homes rose approximately 6.2 per cent over the latest year.

Significant Findings:

The seasonally adjusted purchase-only HPI rose in 47 states and in the District of

Columbia during the second quarter. Top 5 in annual appreciation: 1) Nevada 2) California 3) Arizona 4) Oregon and 5) District of Columbia.

Of the nine census divisions, the Pacific division experienced the strongest increase

in the latest quarter, posting a 4.6 per cent increase and a 16.2 per cent increase since last year. House prices were weakest in the East South Central division, where prices increased 0.9 per cent from the prior quarter.

As measured with purchase-only indexes for the 100 most populated metropolitan

areas in the U.S., second quarter price increases were greatest in the Orlando Kissimmee-Sanford, FL Metropolitan Statistical Area (MSA) where prices increased by 10.0 per cent. Prices were weakest in the Akron, OH MSA, where they fell 3.9 per cent over that period.

The monthly seasonally adjusted purchase-only index for the U.S. has increased for the last 17 consecutive months. FHFA’s “distress-free” house price indexes, which were published for 12 large metropolitan areas on page 47, generally report lower quarterly appreciation than FHFA’s traditional purchase-only indexes. In eight of the 12 areas covered, the new series — which removes short sales and sales of bank-owned properties — shows lower quarterly appreciation than the purchase-only series.

The complete list of state appreciation rates is on pages 28-29. The list of metropolitan area appreciation rates computed in a purchase-only series is on pages 44-46. Appreciation rates for the all-transactions metropolitan area indexes are on pages 50-62.

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