Fannie Mae’s Home Price Index Increases in Q2

According to Fannie Mae’s latest Home Price Index (FNM-HPI) released on Monday (7-17-23), single-family home prices increased 3.0% year-over-year in 2023Q2. This is down from Q1’s revised annual growth rate of 4.9%. On a quarterly basis, home prices rose a seasonally adjusted 1.9% in Q2, an acceleration from the 1.3% growth reported in Q1. Unadjusted, home prices increased 3.6% in Q2.

Adding additional background and his analysis to the report, Fannie Mae’s Senior Vice President and Chief Economist Doug Duncan said:

“Once again, home price growth surprised to the upside. Housing demand remains resilient, which continues to butt up against the near-historically limited supply of existing homes for sale. Moreover, the ‘lock-in effect,’ in which homeowners are disincentivized to list their homes for sale because of how high mortgage rates have risen, is seriously inhibiting the supply of existing homes available for sale. At nearly 8 percent on a seasonally adjusted annualized basis, this past quarter’s home price growth was well above the historical average.”

With the 30-year mortgage rate once again approaching 7 percent, it’s yet to be seen whether mortgage demand will finally cool in response, or whether higher rates will simply further suppress supply. If the latter, we expect additional near-term home price appreciation. One consequence of the stronger home price environment is that new home construction is well-supported. Unfortunately, any hopes of a better-balanced home supply situation may rest on the ability of homebuilders to meet ongoing demand.”