Home price appreciation to moderate, chief economist says.
The price of single-family homes surged at an annual rate of 19.4% in Q2 2022, marking the second highest level on record, according to Fannie Mae’s latest Home Price Index.
By comparison, the index was only at 17.3% at the same time last year. Quarterly, home prices went up 4.3% in Q2 on a seasonally adjusted basis.
Although home prices went down from 20.5% in the previous quarter, Doug Duncan, vice president and chief economist at Fannie Mae, noted that it still maintained “a near-historic pace of appreciation” since the index began in 1975.
He also said the low inventory levels continue to drive price growth like never before, leading to more affordability concerns for homebuyers. Meanwhile, Freddie Mac reported that 30-year mortgage rates averaged 5.7% by the end of Q2.
“At the end of 2021 and extending into 2022, we believe many homebuyers pulled forward their purchase plans to avoid expected increases in mortgage rates, contributing to demand for homes and strong price appreciation,” Duncan said. “Given the sharp rise in mortgage rates since that time, and the resulting negative impact on affordability to potential homebuyers, we expect purchase demand to cool in the quarters ahead, and for home price appreciation to moderate as a result.”
Fannie Mae’s index is a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the US – excluding condos.