U.S. home prices increased 5.9% in the third quarter compared with the second quarter and were up 5.9% compared with the third quarter of 2023, according to the Fannie Mae’s quarterly home price index report.
This represents a deceleration compared to the previous quarter’s downwardly revised annual growth rate of 6.4%, the firm says.
“Despite decelerating slightly, home price growth remained robust in the third quarter, as the supply of homes for sale, particularly on the existing side, remained weak relative to historical levels,” says Mark Palim, senior vice president and chief economist for Fannie Mae, in a statement. “Even though mortgage rates fell precipitously in the third quarter, and we saw some improvements to the months’ supply of homes for sale, home purchase activity barely budged – at least on a national basis – which we view as evidence that the market remains significantly constrained by both the ‘lock-in effect’ and affordability generally, but especially elevated home prices.
“In fact, consumers have told us as much: In September, high home prices supplanted high mortgage rates as the top reason for our survey respondents’ overwhelming pessimism toward homebuying conditions,” Palim says. “Overall, the strength of this latest home price reading confirms the ongoing challenges with tight supply; however, the index’s continued deceleration shows that we’re slowly moving toward a better balance between supply and demand.”
The Fannie Mae 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.
Photo: David Nieto