FHFA Says U.S. House Prices Rose 0.3% in July

U.S. single-family house prices rose 0.3% in July from the previous month, according to the Federal Housing Finance Agency, returning to growth after the national index was unchanged in June. Prices were 2.6% higher than a year earlier, showing that values were still rising nationally even as the housing market continued to face high borrowing costs and uneven regional conditions.

The July result comes from FHFA’s seasonally adjusted, purchase-only House Price Index, which tracks repeat sales of single-family homes financed with mortgages purchased or securitized by Fannie Mae and Freddie Mac. FHFA’s House Price Index program covers all 50 states and more than 400 U.S. cities and uses a weighted repeat-sales method designed to measure changes in the value of the same properties over time.

July’s monthly increase followed a flat June reading. In its second-quarter report, FHFA said national house prices had risen 0.3% from the first quarter and 2.1% from a year earlier. The new July reading therefore extends the broader pattern of modest national appreciation rather than a return to the much faster price growth seen earlier in the decade.

Regional price trends remained sharply divided

The national 0.3% increase masked a wide spread across the nine census divisions. Prices rose in seven divisions during July. The Middle Atlantic division, which includes New York, New Jersey and Pennsylvania, recorded the largest monthly increase at 1.5%. The Mountain division, covering states including Arizona, Colorado, Idaho, Nevada and Utah, posted the largest decline at 0.8%.

The regional gap was also visible over the 12 months through July. Prices increased in all nine census divisions, but the pace ranged from 0.6% in the Mountain division to 6.3% in the Middle Atlantic. That means the strongest annual regional gain was more than ten times the weakest, a reminder that a single national figure can hide very different local housing conditions.

FHFA’s second-quarter data had already shown a similar geographic split. For the quarter ending in June, the agency reported stronger annual appreciation in several northeastern and Midwestern states, while some western markets were flat or lower from a year earlier. July did not erase that divide. Instead, the latest monthly figures show that the gap between stronger eastern markets and softer parts of the West remained an important feature of the national housing picture.

The FHFA index is not a measure of the dollar price of a typical U.S. home. Because it follows repeat sales, it is intended to measure price change while reducing some of the distortion that can come from changes in the mix of homes sold from one month to the next. That distinction matters when comparing the index with median sale-price measures, which can rise or fall partly because more expensive or less expensive homes make up a larger share of sales.

High mortgage rates continue to pressure affordability

House prices are still rising at a time when mortgage rates remain elevated. Freddie Mac’s Primary Mortgage Market Survey put the average 30-year fixed mortgage rate at 7.03% for the week ended September 24, up from 6.95% a week earlier. The average 15-year fixed rate was 6.42%. Those rates affect the monthly payment a buyer can afford even when home-price growth itself is relatively modest.

Positive house-price growth alongside high financing costs helps explain why affordability remains difficult for many prospective buyers. A 2.6% annual rise in the value of a home is far slower than the double-digit increases seen during the pandemic-era housing boom, but a buyer financing most of a purchase price can still face a substantially higher monthly payment when mortgage rates are near 7%.

Other official housing data point to a market with more inventory and still-uncertain demand. The Census Bureau and Department of Housing and Urban Development estimated that new single-family home sales ran at a seasonally adjusted annual rate of 684,000 in August, up 6.4% from the revised July rate of 643,000. Census reported a large margin of error around that monthly change, so the increase was not statistically distinguishable from no change.

There were an estimated 483,000 new homes for sale at the end of August, equivalent to 8.5 months of supply at the current sales pace. The median price of a new home sold was $393,700. These figures cover newly built homes, while FHFA’s index measures repeat price changes across homes financed through the government-sponsored enterprises, so the two data sets describe different parts of the market. Taken together, they show that inventory has become less restrictive even as nationwide values remain above year-earlier levels.

FHFA’s August reading is due in late October

The next FHFA monthly House Price Index is scheduled for October 27 and will include data through August. That release will show whether July’s 0.3% gain extended into late summer and whether the regional divide narrowed or widened.

Until then, the July data leave a mixed picture. National house prices are still appreciating, but at a moderate pace, and the regional spread is unusually important for interpreting the headline. With mortgage rates elevated and new-home inventory well above the tight levels that characterized the earlier housing boom, the next readings on prices and sales will help show whether the market is settling into slower appreciation or beginning another shift.