Home prices have been rising for more than a decade
The housing market has seen its share of highs and lows in recent years, but appreciation has only moved in one direction: up. Could that be changing?
In what has now been a 12-year run, home appreciation is still on the rise, but the pace is starting to slow.
Overall U.S. home prices rose 5.7% in the second quarter compared to a year earlier, according to the Federal Housing Finance Agency's Aug. 27 report. The housing market has now experienced positive annual appreciation each quarter since the start of 2012.
However, the pace of growth has slowed for the past three quarters, likely due to higher inventory and elevated mortgage rates, said Anju Vajja, deputy director for FHFA's division of Research and Statistics.
The report aligns with data from the latest Case-Shiller U.S. National Home Price Index, which also came out on Aug. 27 and showed a 5.4% year-over-year rise in June. The FHFA uses loan purchasing data from Fannie Mae and Freddie Mac for its index, while Case-Shiller uses a composite of single-family home price data for the nine U.S. Census divisions.
Double-digit gains in the Northeast: According to the FHFA report, the states where home appreciation rose the fastest in Q2 are mostly in the Northeast. Vermont had the highest year-over-year increase, jumping 13.4%, followed by West Virginia (up 12.3%) and Rhode Island (up 10.1%).
Idaho (up 1.1%) and Louisiana (up 1.2%) had the slowest home appreciation growth.
Among metro areas, the FHFA reported that Syracuse, New York, had the highest annual appreciation at 14.2%, while Austin, Texas, and Fort Myers, Florida, each posted a 3.2% decline year-over-year.
NYC is No. 1: All 20 metro areas in the Case-Shiller composite list experienced year-over-year growth, with New York City, which was up 9%, rising the fastest, and Portland, Oregon (up 0.8%) the slowest.
While the Case-Shiller index has seen price gains slow in recent months, the growth is "still remarkable" in the context of record-high home prices and mortgage rates that were near 7% in the second quarter, said Lisa Sturtevant, chief economist at Bright MLS.
Additionally, inventory is still low by historical standards, so "right now, there is no evidence that we will see a major home price drop nationally in 2024," Sturtevant noted. But there could be some mild relief this fall, she added, as seasonality pushes down prices and inventory builds.