Home prices across the U.S. increased in the second quarter, but the pace is slowing, and homes are slowly starting to become more affordable.
Home prices rose 1.2% from the first quarter this year, and 5.6% from the second quarter last year, according to the Federal Housing Finance Agency House Price Index. FHFA’s seasonally adjusted monthly index for June increased 0.2% from May.
The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
While home prices rose 5.6% from last year, prices of other goods and services remained unchanged. The inflation-adjusted price of homes rose approximately 5.7% over the last year.
“Although the appreciation rate for the second quarter was of similar magnitude to what we’ve been seeing for several years now, a close look at the month-over-month price changes during the quarter reveals a potentially significant market shift,” said FHFA Supervisory Economist Andrew Leventis.
“Our monthly price index indicates that in each of the three months of the quarter, the increase was only 0.2%,” Leventis said. “This is a much more modest pace of appreciation than we’ve seen in some time and most likely reflects accumulated pressures from significantly reduced home affordability.”
The June increase of 0.2% fell slightly below economists’ predictions of 0.3%, according to an article by Akin Oyedele for Business Insider.
While home prices are rising at a slower rate, they still rose year-over year in every state except Vermont. The top five states in annual appreciation were: Oregon with 11.7%, Washington with 10.3%, Colorado with 10.2%, Florida with 10% and Nevada with 9.6%.