WASHINGTON– Single-family home prices increased 5.3% from Q3 2022 to Q3 2023, up from the previous quarter’s revised annual growth rate of 2.9%, according to Fannie Mae’s latest Home Price Index reading.
The news comes as data show home sales have hit their lowest point in two decades.
The 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.
According to Fannie Mae, on a quarterly basis, home prices rose a seasonally adjusted 2.0% in Q3 2023, a deceleration from 2.1% growth in the second quarter. On a non-seasonally adjusted basis, home prices increased by 1.7% in Q3 2023.
“Slightly slowing house price growth may reflect in part the affordability impact of the higher mortgage rate environment – even though prices were still solidly higher this past quarter than a year earlier,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “We’re now in the fourth quarter, when house price appreciation typically slows, and with interest rates both higher and more volatile, it would be reasonable to expect some additional slowing in price appreciation, but the ongoing supply problems continue to drive the larger affordability challenge.”
Low Point Hit
Meanwhile, high rates have helped push home sales down to their lowest levels since the subprime crisis period.
“Sales of previously owned homes in 2023 are expected to dwindle to a rate not seen since at least 2011, when the U.S. population was smaller and the country was still recovering from one of the worst housing crises ever, according to many economist forecasts,” the Wal Street Journal reported.
Chen Zhao, economics research lead at real-estate brokerage Redfin, told the Journal the company is estimating that total existing-home sales in 2023 would amount to around 4.1 million, which would mark the smallest number of sales since about 2008.
Zhao further predicted sales are unlikely to pick up much next year, with mortgage rates likely to remain at elevated levels, the Journal said.
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