Single-family home prices increased 3% from Q2 2022 to Q2 2023, down from the previous quarter’s revised annual growth rate of 4.9%, according to Fannie Mae [1]’s latest Home Price Index (HPI) [2].
On a quarterly basis, home prices rose a seasonally adjusted 1.9% in Q2 2023, an acceleration from 1.3% growth in Q1. On a non-seasonally adjusted basis, home prices increased by 3.6% in Q2 2023.
Home Price Growth Again Surprises to the Upside
“Once again, home price growth surprised to the upside,” said Doug Duncan, Fannie Mae Senior VP and Chief Economist. “Housing demand remains resilient, which continues to butt up against the near-historically limited supply of existing homes for sale. Moreover, the ‘lock-in effect,’ in which homeowners are disincentivized to list their homes for sale because of how high mortgage rates have risen, is seriously inhibiting the supply of existing homes available for sale. At nearly 8% on a seasonally adjusted annualized basis, this past quarter's home price growth was well above the historical average."
[3]
Duncan continued: “With the 30-year mortgage rate once again approaching 7%, it’s yet to be seen whether mortgage demand will finally cool in response, or whether higher rates will simply further suppress supply. If the latter, we expect additional near-term home price appreciation. One consequence of the stronger home price environment is that new home construction is well-supported. Unfortunately, any hopes of a better-balanced home supply situation may rest on the ability of homebuilders to meet ongoing demand.”
To read the full release, including more data and methodology, click here [2].