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Posted 04/24/2016

Recovery Complete: U.S. Home Values Up 5.6% From Last Year

FHFA Home Price Index: Home values eclipse last decade's peak

Home Values Hit New Record

U.S. home values have continued to climb in 2016, pushing home prices to new, all-time highs, non-adjusted for inflation.

The Home Price Index, which is published by the Federal Housing Finance Agency (FHFA), shows U.S. property values up another 0.4 percent in February.

It marks the 27th consecutive month during which home values have climbed and, nationwide, valuations have increased 5.6% from a year ago.

With home values up, existing homeowners are refinancing to take cash out, and others are using their newfound equity to cancel FHA mortgage insurance.

The rise in home valuation is spurring U.S. home sales, too, with renters worried about "missing out" on today's active market. Homes are expected to get more expensive into 2017 and current mortgage rates are expected to increase by the end of the year.

This is creating an urgency to buy homes.

Thankfully, there is an abundance of¬†low- and no-down payment¬†mortgages, including a new program available from most lenders called¬†HomeReady‚ĄĘ.

HomeReady‚ĄĘ allows for just 3% down.

It's an excellent time to be a buyer. Mortgage rates are low, home values are projected to rise, and banks are approving more mortgage applications than during any period this decade.

Click to see today's rates (Jul 30th, 2016)

Home Price Index Makes All-Time High

The FHFA Home Price Index is a product of the Federal Home Finance Agency (FHFA). It tracks changes in the value of a home between subsequent sales. Data is supplied via Fannie Mae and Freddie Mac as part of the mortgage approval process.

The Home Price Index (HPI) is benchmarked to a value of 100, which is meant to represent the U.S. housing market as it existed in 1991, the year in which the index was created.

In February 2015, the Home Price Index climbed to 231.4, a 0.4 percent increase from the month prior and a 5.6% increase from the year-ago levels.

It's also the highest published reading of all-time on a non-adjusted basis, eclipsing last decade's peak which was set in April 2007.

The rebound suggests that housing has made a "full recovery" from last decade's downturn -- but today's active buyers already knew that.

Homes have been selling more rapidly than in prior months and at higher prices.

Bidding wars are common with aggressively-priced homes. In many U.S. markets, it's not usual to see homes sell above their initial list price.

Additionally, the National Association of Home Builders (NAHB) reports an influx of buyer interest, which has foot traffic through model units near its highest point in a decade. Because of these factors, home values are expected to climb in the coming months.

The good news is that mortgage rates are currently cheap.

Freddie Mac's weekly mortgage rate data puts the average 30-year conventional fixed-rate mortgage near the lowest levels of the last 3 years; and rates for FHA and VA mortgage rates are quoted even lower.

FHA mortgage rates typically run 12.5 basis points (0.125%) below rates for a comparable conventional loan, and VA mortgage rates typically out lower by 25 basis points (0.25%).

VA home loans are available as part of the VA benefits package for active duty members and veterans of the Armed Services, National Guard, or the Reserves. FHA loans have no such restrictions.

You can afford "more home" when mortgage rates are down.

Click to see today's rates (Jul 30th, 2016)

Washington, California Lead Home Price Growth

The FHFA Home Price Index is up more than five percent from one year ago, which has pushed the index to its highest value in history, completing the housing market's recovery from last decade's downturn.

That's national data, though. State-by-state, the story's a little bit different. Not all areas are expanding at the same growth rate.

What's happening in California, for example, is not the same as what's happening in Florida. The Home Price Index doesn't address state-level activity in this manner.

It does, however, group values by region.

As compared to one year ago, the Pacific region is leading the nation, rising 8.4% from the year prior.

Annually, home price growth has varied by region:

  • Pacific : +8.4% (Hawaii, Alaska, Washington, Oregon, California)
  • Mountain : +6.8% (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona)
  • Middle Atlantic : +3.9% (New York, New Jersey, Pennsylvania)
  • East North Central : +4.7% (Michigan, Wisconsin, Illinois, Indiana, Ohio)
  • South Atlantic : +5.8% (Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida)

New England, an area which includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut, has changed +2.5 percent since twelve months ago.

The West North Central, which includes Oklahoma, Arkansas, Texas, and Louisiana, rose +5.6%.

What Are Today's Mortgage Rates?

Home values are rising sharply, but the cost of homeownership is not. This is because mortgage rates are low, and lenders are approving more loans than during any period this decade.

Take a look at today's live rates now. Rates are available with no social security number required to get started, and with instant access to your "mortgage credit scores"

Click to see today's rates (Jul 30th, 2016)

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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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)