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Economy in Brief

FHFA House Prices Declined in July
by Sandy Batten  September 27, 2022

• This was the first monthly decline since May 2020 and only the second since January 2017.

• House prices posted monthly declines in eight of nine census divisions.

The Federal Housing Finance Agency (FHFA) House Price Index fell 0.6% m/m (+13.9% y/y) in July following a tepid 0.1% monthly gain in June, which was not revised. This was the first monthly decline since May 2020 and only the second since January 2017, indicating that the Fed's aggressive tightening of monetary policy is beginning to temper the previously torrid rise in house prices. Prior to the June and July readings, house prices had risen 1% or more in 23 of the previous 24 months. The fall in the year-on-year rate of increase in July was to the lowest rate since February 2021.

The decline in house prices was widespread with prices falling in July from June in eight of the nine census divisions. The only exception being an extremely modest 0.1% m/m gain in the East North Central region. The largest decline was a 1.6% m/m drop in the Pacific region. Other declines of note were a 1.1% m/m decline in New England and a 1.0% m/m fall in the Mountain region. The smallest decline was a 0.1% m/m drop in the West North Central region.

House prices continued to advance in July from a year ago but the pace of advance declined in every census division. The slowest annual increase was posted by the Pacific region at 10.0% while the South Atlantic region reported the largest annual rise at 18.9%.

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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