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Rising Rates Can’t Keep Values Down

Despite rising interest rates, home prices jumped 1.5 percent in the last quarter of 2016 and more than 6 percent year-over-year, according to the Federal Housing Finance Agency’s (FHFA) House Price Index (HPI) released on Thursday.

The House Price Index, which is calculated using price information on mortgages sold to or guaranteed by Fannie Mae or Freddie Mac, was up 0.4 percent from November to December.

Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown,” said Andrew Leventis, FHFA Deputy Chief Economist. “Although it will certainly take more time for the full effects of the elevated interest rates to be felt, there is no evidence of a normalization in the unusually low inventories of homes available for sale, which has been the primary force behind the extraordinary price gains.”

Year over year, home prices rose in 46 states and the District of Columbia. Oregon saw the most appreciation, with 11 percent, followed by Colorado (10.6 percent), Florida (10.4 percent), Washington (10.2 percent), and Nevada (8.9 percent.)

The metro area with the largest price appreciation was Tampa-St. Petersburg-Clearwater, Florida, which saw a 13.2 percent jump. Wilmington, Delaware-Maryland-New Jersey saw the weakest prices, which declined 1.8 percent year-over-year.

Of the nine divisions of the U.S. Census, the most growth was seen in the Mountain region, which jumped 2.1 percent for the quarter and 8 percent over the year. The Middle Atlantic region had the weakest growth, with prices rising just 0.9 percent since 2015.

FHFA’s HPI tracks changes in average home prices by analyzing changes in home values for the individual properties and gathers home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. According to the FHFA, the underlying “repeat-transactions” methodology constructs index estimates by statistically evaluating price appreciation (or depreciation) for homes with multiple values over time.  To view video highlights of the FHFA’s House Price Index, click here.

About Author: Aly J. Yale

Aly J. Yale is a freelance writer and editor based in Fort Worth, Texas. She has worked for various newspapers, magazines, and publications across the nation, including The Dallas Morning News and Addison Magazine. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.
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