Where are Home Prices Headed?

Filed in Economics, Housing Trends by on April 8, 2015 1 Comment

Two major measurements of the rise in home prices show annual growth rates of 4.5% and 5.1%, respectively. Meanwhile, most mortgage executives and consumers believe that prices will continue to rise this year, according to a recent national survey.

NAHB’s Eye on Housing reports that the latest home price index by the Federal Housing Finance Agency shows that home prices rose by 5.1% on a 12-month seasonally adjusted basis in January. This marks the 36th consecutive month of year-over-year growth. During this nearly three-year period, house prices have risen by 20.1%.

Similarly, the recent release from Standard and Poor’s (S&P) and Case-Shiller indicates that their measure of national house prices rose by 4.5% on a year-over-year seasonally adjusted basis. This is the 33rd consecutive month of year-over-year increases in the house price index. During this time, house prices have risen by 22.1%.

According to the S&P/Case-Shiller National House Price Index, year-over-year house price growth has slowed in recent months. Year-over-year house price growth peaked at 10.9% in October 2013. However, as Figure 1 below illustrates, annual house price growth was 4.5% in January 2015.

Presentation1

While most expect home prices to continue to rise, senior mortgage executives are more optimistic than the average consumer, according to recent data from Fannie Mae. The difference in the level of optimism about future house price growth largely reflects consumers’ view that house prices will likely stay the same over the year.

As Figure 2 below illustrates, 62% of senior mortgage executives polled by Fannie Mae’s Mortgage Lender Sentiment Survey expect house prices to rise over the next 12 months. Meanwhile, one-third of senior mortgage executives expect house prices to stay the same while only 3% expect house prices to fall over the year.

According to the National Housing Survey, a representative survey of the general population that is also administered by Fannie Mae, 46% of consumers believe that house prices will rise over the year, but 41% believe that house prices will remain the same. Meanwhile, only 6% of consumers believe that house prices will fall.

Presentation2

View the full histories of the Case-Shiller national, 10-city and 20-city home price indices.

View the full histories of the FHFA U.S. and 9 Census divisions home price indices.

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