Annual Home Price Growth Declined in Past Year, Down 9.2 Percent in Q4

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Single-family home prices increased at a non-seasonally adjusted annual rate of 9.2% in Q4 2022, compared to Q4 2021, down from the previous quarter’s revised annual growth rate of 13.1%, according to Fannie Mae‘s latest Home Price Index (FNM-HPI) reading, a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the United States, excluding condos.

On a quarterly basis, home prices rose a seasonally adjusted 0.2% in Q4 2022, just above the 0.1% growth seen last quarter. On a non-seasonally adjusted basis, home prices declined by 1.0% in Q4 2022.

“The rise in mortgage rates over the past year and record inflation have constrained the purchasing power of prospective homebuyers,” says Mark Palim, Fannie Mae’s vice president and deputy chief economist. “The resulting affordability pressures are evident in the home price declines of the past two quarters, along with the downturn in homes sales.

“The rise in rates also exacerbates the ‘lock-in effect’ in which existing homeowners who have rates well below current market rates have a financial disincentive to give up their current mortgage and purchase a different home at a higher mortgage rate, thereby reducing the supply of homes available for sale,” continues Palim. “We believe that a key factor that will impact home prices in 2023 is how the tension between a reduced supply of homes available for sale and lower mortgage demand is resolved.”

The FNM-HPI is produced by aggregating county-level data to create both seasonally adjusted and non-seasonally adjusted national indices that are representative of the whole country and designed to serve as indicators of general single-family home price trends. The FNM-HPI is publicly available at the national level as a quarterly series with a start date of Q1 1975 and extending to the most recent quarter, Q4 2022. Fannie Mae publishes the FNM-HPI approximately mid-month during the first month of each new quarter.

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