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Economy in Brief

U.S. FHFA House Price Advance Moderates Slightly in May
by Carol Stone, CBE  July 26, 2022

• House prices rose "just" 1.4% in the month, but maintain strong year-to-year pace.

• Prices gain in every region, though Pacific and Mid Atlantic slow noticeably.

The Federal Housing Finance Agency (FHFA) House Price Index rose 1.4% in May following a 1.5% increase in April, revised from 1.6%. This was the 24th consecutive month that the monthly change has been 1% or more. As noted in this commentary last month, prior to the recent period, the monthly increase had equaled or exceeded 1% only six times since the series began in 1991. The year-to-year increase in May was 18.3%, down from 18.8% in April. While the annual rate of increase slowed, it continued to be historically quite elevated, down only slightly from the series high of 19.3% y/y reached in July 2021 and February 2022.

Regional data continue to show increases in every part of the U.S. Granted, the price increase in the Pacific region was just 0.2%, but it was up 16.0% from a year ago. The next "slowest" was the Mid Atlantic area, up 0.9% in May and 13.9% from May 2021. West North Central states saw a 1.0% increase in May, up 14.6% from a year ago. Monthly increases in other regions ranged from 1.5% in the Mountain states to 2.0% in New England. Year-on-year advances were strongest in the South Atlantic region, 23.8%, and the Mountain states, 22.7%. Thus, while the Mountain states had a relatively moderate monthly increase, prices there had obviously been very strong in previous months, producing the high year-to-year rate.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancings on the same kinds of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver's USECON database.

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