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Home Prices Rise in Q2, While July Home Values Decline

ups-and-downs-graphHome prices in the U.S. rose 1.2 percent in the second quarter of 2015 for the 16th consecutive month, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI) released Tuesday.

The FHFA also reported that the seasonally adjusted monthly index for June increased 0.2 percent from May.

In addition, the seasonally adjusted, purchase-only HPI increased 5.4 percent from the second quarter of 2014 to the second quarter of 2015, while prices of other goods and services dropped 1.4 percent. Thus, the inflation-adjusted price of homes rose approximately 6.9 percent over the latest year.

“Home price growth in the second quarter once again far exceeded the pace of overall inflation, even as mortgage rates drifted upwards,” said Andrew Leventis, FHFA's principal economist. “Although too early to tell whether it’s a sign of a slowdown, the monthly appreciation rate in June was more modest than we have seen in a while.”

fhfa1According to the FHFA, home prices increased in every state between the second quarter of 2014 and the second quarter of 2015. Among the top five areas in annual appreciation were Colorado (10.6 percent); Nevada (10.5 percent); Florida (9.7 percent); Hawaii (9.5 percent); and Washington (8.8 percent).

On the other end of the spectrum, Zillow reported on Tuesday that home values lowered in July for the first time in four years in their July Real Estate Market Reports.

Slowing home values could provide more opportunities for hopeful buyers who have been waiting on the sidelines for the market to cool off.

Zillow credits the housing market's shift to slower pace as the cause for the decline in home values since the market began recovering almost four years ago.

"This slight dip in home values is a sign of the times," said Svenja Gudell, Zillow's chief economist. "Many people didn't think it was happening, but it is: we're going negative. We've been expecting to see a monthly decline as markets return to normal. However, this is not like the bubble bust. We're not going to see 10 percent declines. The market is leveling off, and it's good news, particularly for buyers, because it will ease some of the competitive pressure."

According to the report, homes lost 0.1 percent of their value nationally in July, falling to $179,900. Annually, homes appreciated 3 percent, down from 3.4 percent in June. Meanwhile, rents continue to grow at a rapid pace, up 4.2 percent from last July to $1,376.

"Slowing home values could provide more opportunities for hopeful buyers who have been waiting on the sidelines for the market to cool off," the report said. "More homes may be coming online as homeowners who have been watching strong home value growth decide to list their houses as appreciation slows and smaller gains are expected. This could help ease the constrained inventory the market has been facing for the past several months."

Click here to view the Federal Housing Finance Agency's HPI. 

Click here to view Zillow's July Real Estate Market Reports.

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.

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