Posted July 24, 2014

Home Values Reach 73-Month High As Mortgage Rates Drop To 3s

FHFA: Home Price Index (HPI) rises to its highest point in more than 6 years

According to the FHFA Home Price Index, U.S. property values climbed in May, the sixth straight month of home price growth nationwide. Home values are up 6% percent from last year and appear headed higher into fall.

Demand for homes is outweighing supply; and today's mortgage rates are so low that they're changing the economics of "Buy vs Rent".

30-year mortgage rates are near a 14-month low.

Click to compare today's live rates.

Home Price Index: Highest Reading in 73 Months

The FHFA Home Price Index is a product of the Federal Home Finance Agency (FHFA). It tracks the change in a given home's value between subsequent sales, using data supplied to Fannie Mae and Freddie Mac as part of the mortgage approval process.

The index is benchmarked to a value of 100, which is meant to represent the U.S. housing market as it existed in 1991.

For May 2014, the index moved to 212.4 -- its highest reading since April 2008.

Matching the value from April 2008 is significant to today's U.S. housing market. At the time, last decade's housing downturn was less than 12 months old and home values had yet to drop in many U.S. markets. The Housing and Recovery Act had yet to be created; and the HARP refinance program wouldn't be created for another twelve months. 

The May Home Price Index shows a housing market in recovery. Demand outpaces supply and listing prices are rising. Competition for homes is fierce.

According to the National Association of REALTORS®, 42% of all homes sold in 30 days or fewer in June. For today's buyers, it's become tough to find great, inexpensively-priced homes.

Thankfully, current mortgage rates are at their lowest point in more than a year.

Freddie Mac's weekly mortgage rate survey puts the 30-year fixed near 4.125 percent, but that figure is just an average. Many lenders are already quoting mortgage rates in the 3s.

Low mortgage rates means more purchasing power and expanded home affordability.

Click to get today's live mortgage rates.

States Near Texas Gains Most, Followed By Midwest

The FHFA's Purchase-Only Home Price Index rose 0.4% in May 2014, and is up 5.5% from one year ago. The index is at its highest point in more than 6 years.

Home values cannot be considered on a national level, however. Indices such as the Home Price Index examine housing broadly, and do little to capture the buyer-seller activity of any one state, city, or neighborhood.

The Home Price Index does group its findings by region, however, and, in May, the West South Central Region and Middle Atlantic Region led all U.S. markets in home price growth as compared to the month prior, expanding 1.1% percent. The East South Central Region was the laggard, losing 0.7 percent.

Over the last 12 months, home price growth has varied by region:

  • Pacific : +9.6% (Hawaii, Alaska, Washington, Oregon, California)
  • Mountain : +8.4% (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona)
  • Middle Atlantic : +2.5% (New York, New Jersey, Pennsylvania)
  • East North Central : +4.6% (Michigan, Wisconsin, Illinois, Indiana, Ohio)
  • South Atlantic : 5.4% (Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida)

The New England Region, an area which includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut is +2.6 percent since last year.

Compare Today's Mortgage Rates

Home values are up. Thankfully, though, mortgage rates are down. The average 30-year mortgage rate is near a 14-month low, and such low rates help to keep homes affordable.

Get today's mortgage rates now. Rates are available for free online with no social security number required to get started and no obligation to proceed.

Click here to get rates.

Click here for today's mortgage rates.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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