Fannie Mae Home Price Index Rises 5.8% Year-Over-Year in Q4

On Tuesday, Fannie Mae’s Economic and Research (ESR) Group released its latest Home Price Index (FNM-HPI). According to the FNM HPI, single-family home prices increased 5.8% year-over-year in Q4, an acceleration from the previous quarter’s downwardly revised annual growth rate of 5.4%.

On a quarterly basis, home prices rose a seasonally adjusted 1.7% in Q4, up from the downwardly revised 1.2 % growth rate in Q3. On a non-seasonally adjusted basis, home prices increased just 0.3%.

The FNM-HPI is a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the US, excluding condos.

In remarks accompanying the report, Fannie Mae Senior Vice President and Chief Economist Mark Palim said:

“Year-over-year home price growth accelerated in the fourth quarter, following back-to-back quarters of deceleration. Inventories of existing homes for sale have improved from a year ago but remain historically low, due largely to the so-called ’lock-in effect.’ Since the beginning of October, mortgage rates have rebounded after bottoming out around 6.1% and are now inching closer to a new psychological barrier, the 7% threshold. The higher mortgage rate environment is not only hurting affordability, but it’s also exacerbating the lock-in effect by further reducing homeowners’ incentive to move.

The housing market in 2025 faces a difficult balancing act, with a notable decline in mortgage rates likely needed to help unwind the lock-in effect and thaw the supply of existing homes for sale. However, we believe such a decline would likely jumpstart demand from potential first-time homebuyers currently waiting to purchase, which could lead demand to outpace any improvement in supply, further exacerbating already-high home prices and purchase affordability.”