Federal Housing Finance Agency

25 August 2016

U.S. House Price Index Report – 2Q 2016 / June

U.S. house prices rose 1.2 percent in the second quarter of 2016 according to the Federal Housing Finance Agency (FHFA) House Price Index (FPI).   House prices rose 5.6 percent from the second quarter of 2015 to the second quarter of 2016. FHFA’s seasonally adjusted monthly index for June was up 0.2 percent from May.  The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

“Although the appreciation rate for the second quarter was of similar magnitude to what we’ve been seeing for several years now, a close look at the month-over-month price changes during the quarter reveals a potentially significant market shift,” says FHFA Supervisory Economist Andrew Leventis.  “Our monthly price index indicates that in each of the three months of the quarter, the increase was only 0.2 percent.  This is a much more modest pace of appreciation than we’ve seen in some time and most likely reflects accumulated pressures from significantly reduced home affordability.”

While the HPI rose 5.6 percent from the second quarter of 2015 to the second quarter of 2016, prices of other goods and services were nearly unchanged.  The inflation-adjusted price of homes rose approximately 5.7 percent over the last year.

Significant Findings

  • Home prices rose in every state except Vermont between the second quarter of 2015 and the second quarter of 2016.  The top five states in annual appreciation were:  1) Oregon 11.7 percent; 2) Washington 10.3 percent; 3) Colorado 10.2 percent; 4) Florida 10.0 percent; and 5) Nevada 9.6 percent.
  • Among the 100 most populated metropolitan areas in the U.S., annual price increases were greatest in North Port-Sarasota-Bradenton, FL, where prices increased by 15.7 percent.  Prices were weakest in Bridgeport-Stamford-Norwalk, CT, where they fell 3.3 percent.
  • Of the nine census divisions, the Mountain division experienced the strongest increase in the second quarter, posting a 1.9 percent quarterly increase and an 8.1 percent increase since the second quarter of last year.  House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.6 percent from the last quarter.

The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975.

The HPI serves as a timely, accurate indicator of house price trends at various geographic levels. Because of the breadth of the sample, it provides more information than is available in other house price indexes. It also provides housing economists with an improved analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas.

The HPI includes house ​price figures for the nine Census Bureau divisions, for the 50 states and the District of Columbia, and for Metropolitan Statistical Areas (MSAs) and Divisions.