Latest Monthly House Price Index Shows Sign of Possible Slowing

U.S. house prices rose 0.9 percent in the third quarter of 2014 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the 13th consecutive quarterly price increase in the purchase-only, seasonally adjusted index.

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 4.5 percent from the third quarter of 2013 to the third quarter of 2014. FHFA’s seasonally adjusted monthly index for September was unchanged from August.

“Easing interest rates and modestly improving labor market conditions helped to drive up prices in the third quarter,” said FHFA Principal Economist Andrew Leventis. “The price increases were relatively small in most areas, however, and are consistent with the type of market deceleration that other housing market statistics have shown in recent periods.”

FHFA’s expanded-data house price index, a metric that adds transaction information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 1.5 percent over the prior quarter. Over the last year, that index is up 6.0 percent. For individual states, price changes reflected in the expanded-data measure and the traditional purchase-only HPI are compared on pages 17-19 of this report.

Significant Findings:

  • The seasonally adjusted, purchase-only HPI rose in 40 states during the third quarter of 2014. The top five states in annual appreciation: 1) Nevada 2) Hawaii 3) California 4) North Dakota 5) Florida.
  • Of the nine census divisions, the West South Central division experienced the strongest increase in the third quarter, posting a 1.8 percent increase and a 5.8 percent increase since last year. House prices were weakest in the Middle Atlantic division, where prices increased 0.1 percent from the prior quarter.
  • As measured with purchase-only indexes for the 100 most populated metropolitan areas in the U.S., third quarter price increases were greatest in the San Jose-Sunnyvale-Santa Clara, CA Metropolitan Statistical Area (MSA) where prices increased by 6.6 percent. Prices were weakest in the Greensboro-High Point, NC MSA, where they fell 4.4 percent.
  • Eleven of the 20 metropolitan areas with the highest annual appreciation rates were in California.
  • The monthly seasonally adjusted purchase-only index for the U.S. showed no change between August and September. The last time prices did not change on a month-over-month basis was in November 2013.

FHFA’s “distress-free” house price indexes, which are published for 12 large metropolitan areas, have tended to show lower quarterly appreciation in recent periods than FHFA’s traditional purchase-only indexes. In the third quarter, however, the distress-free measures do not show systematically different price changes than the purchase-only indexes.

FHFA’s purchase-only and all-transactions indexes average house price changes in either repeat sales or refinancings on the same single-family properties. The purchase-only index is based on more than 7 million repeat sales transactions, while the all-transactions index (calculated using both sales prices and appraisal values from refinance mortgages) includes more than 51 million repeat transactions. Both indexes are based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over the past 38 years.