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Fresh HPI Data Shows Where Pace of Home Price Increases is Slowing

Home Price Index data shows where home price gains are decelerating across the US, giving homebuyers an aerial view of the housing market.

September 29, 2021
September 29, 2021
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Rising home prices in 2021 have been nearly impossible to avoid. To use a phrase from the 1988 film The Blob: “You can’t stop it, you can only hope to contain it.”

The latest Housing Price Index (HPI) from the Federal Housing Finance Agency (FHFA) showed homebuyers where record price run-ups were contained, not rampant, in July. While prices were up 19.2% year-over-year nationwide, several census divisions saw notable slowing in the pace of home appreciation.

HPI uses mortgage data from millions of home sales in more than 400 cities to provide insights into home price fluctuations. This index could help homebuyers identify more affordable areas during their homes search.

How homebuyers can use HPI data to get ahead

Using data from Freddie Mac and Fannie Mae -- the largest mortgage purchasers in the U.S. -- the FHFA HPI is one of the most robust indicators of home price trends.

Homebuyers can use this data to track home price trends across nine census divisions, getting a better sense of which areas are experiencing the most and least price growth.

From June to July, home prices rose on a seasonally adjusted basis between 0.8% in the West North Central to 1.9% in the South Atlantic .

Keep in mind that these are monthly increases. A $300,000 home in the South Atlantic region, on average, appreciated by $5,700 in a single month.

This is perhaps more than the typical homeowner in the region made at their job.

These numbers are encouraging for those who own a home – not so much for those still looking.

Still, homeowners can use the data to find areas of opportunity, where home values are bucking the trend, showing price acceleration.

This may not be immediately helpful to homebuyers in the middle of their home search. But for those just getting started, or planning a year or two ahead, tracking HPI are a window into the larger trends in home price changes.

Uneven cooling in a hot market

While 19.2% annual home appreciation on the national level doesn’t exactly scream “cooling market,” month-over-month data paints a different picture.

Overall, home prices continued to increase in July. However, month-over-month price increases were not as great as they had been in previous months. Nationwide, home prices increased 1.4% from June to July, a substantial decrease from 1.7% growth from May to June and 1.9% growth from April to May.

Price changes are not evenly spread throughout the nation. While some census divisions saw a slow down of price increases in July, others saw the opposite.

The New England and Middle Atlantic regions were standouts, showing month-over-month price acceleration in the face of the opposite trend.

The pace of home price increases slowed in seven of the nine census divisions from June to July. The Mountain division (light green in the map above) saw the largest pullback in month-over-month price changes. Home prices increased by 1.6% from June to July after increasing by 2.3% or more in each of the previous four months.

Interestingly, the Mountain division saw the greatest year-over-year price growth at 25.6%.

Here are all nine census divisions ranked by the change in month-over-month price gains.

Census division  May-June price change  June to July price change  Difference in price change Mountain2.7%1.6%-0.9East North Central1.5%0.9%-0.6Pacific1.7%1.3%-0.4West South Central2.0%1.6%-0.4West North Central1.0%0.8%-0.2East South Central1.8%1.7%-0.1South Atlantic2.0%1.9%-0.1New England1.1%1.2%+0.1Middle Atlantic1.0%1.6%+0.6

Steady demand coupled with low supply will continue to put upward pressure on home prices for the foreseeable future. But home appreciation is not evenly spread.

Heading into the offseason, homebuyers can use HPI to find pockets where home price gains are slowing to a crawl.

Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.

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