Home prices have appreciated at a steady rate of around 6 percent for much of the last four years, and April was no exception at 5.9 percent, according to the FHFA’s House Price Index (HPI) for that month.
However, FHFA’s supervisory economist, Andrew Leventis, said of April’s report that most economists expect price appreciation to decelerate to more normal rates in the future. According to FHFA’s May 2016 HPI report released Thursday, price appreciation slipped to a rate of 5.6 percent. While still high, it still means home prices appreciated at a rate in May that was 30 basis points lower than April. Has the price appreciation deceleration that Leventis referred to begun?
Not necessarily, according to Leventis, but at the same time, he is taking note of what happened in April and May.
“Two months don’t a trend make,” Leventis said. “Still, it is hard to ignore the fact that price growth over the last two months has been slower than during any two month interval since early 2012.”
May’s HPI, which looks at home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac, ended with a value of 234.3—up from 233.8 in April, according to FHFA. Over-the-month, home prices actually increased by 0.2 percent from April to May.
In the National Association of Realtors’ (NAR) Existing-Home Sales Report for the month of June, which was released Thursday, the median existing-home price was $247,700.
Existing-home sales increased by 1.1 percent in June up to an annual rate of 5.57 million and have increased for four straight months; however, NAR Chief Economist Lawrence Yun wonders if they can keep up the pace.
“Looking ahead, it's unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing,” Yun said.
Click here to view the FHFA’s entire House Price Index for May.