Rising Rates Slowed Q4 Home Price Growth

Fannie Mae’s latest Home Price Index (HPI) revealed a quarterly increase of 1.7% on a seasonally adjusted basis as single-family home prices increased 7.1% during the fourth quarter of 2023 year-over-year from the previous quarter’s revised annual growth rate of 5.1%. 

The Fannie May HPI is 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 1.7% in Q4 2023, a deceleration from 2.1% percent growth in the third quarter. On a non-seasonally adjusted basis, home prices increased by 0.4% in Q4 2023. 

"In the current supply-constrained housing market, any changes to the fundamentals of affordability are going to affect demand, and we saw this in the fourth quarter with interest rates peaking near 8% and helping further slow home price growth," said Doug Duncan, Fannie Mae SVP and Chief Economist. "Of course, the fourth quarter is also typically the slowest of the year in terms of housing activity and purchase demand, so seasonality should be taken into account, as well. For the year, housing demand held up surprisingly well, in large part due to ongoing demographic support—Millennials continue to drive demand in many areas—and generally strong household finances."

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 2023. Fannie Mae publishes the FNM-HPI approximately mid-month during the first month of each new quarter.