U.S. home values continue to climb.
According to the Federal Home Finance Agency (FHFA), home valuations rose another 2.0% nationwide through the third quarter, capped by a 0.3 percent increase in values between August and September.
Values have now increased for 20 straight months.
The Federal Home Finance Agency is the overseer of Fannie Mae and Freddie Mac and, each month, using data from the groups' closed loans, the FHFA publishes its Home Price Index (HPI).
The Home Price Index's methodology is based on changes in a home's appraised value on successive FHFA-backed transactions, whether via Fannie Mae or Freddie Mac. Data from purchases and refinances are included.
Streamlined, no-appraisal refinances such as the HARP Refinance are not included in the Home Price Index, nor are loans backed by agencies outside the Federal Home Finance Agency's purview. This category includes VA loans and FHA loans, as well as homes financed via jumbo loans.
According to the most recent Home Price Index, the FHFA reports that home values rose 0.3 percent between August and September on a seasonally-adjusted, annualized basis, marking the 20th consecutive month in which home values rose.
As compared to last year, home values rose 8.5%.
Like all things real estate, home values are a local phenomenon. In September, values rose at different rates in different states.
Some of the month's regional highlights include :
Moving from monthly data to annual figures, results by region diverge. Two U.S. regions experienced relatively large gains, for example -- the Pacific Region gained 19.2% and the Mountain Region grew 11.6%.
The Middle Atlantic states, which includes New York, New Jersey, and Pennsylvania, added just +2.9 percent.
As a home buyer or seller, it's important to keep the Home Price Index in context. This is because anytime you see published, public data showing "home values rising" or "home values falling", the data may be missing critical, supporting disclaimers.
Most home value trackers have built-in flaws, for example, and among the major flaws of the Home Price Index is its "aged data". Today, it's nearly December. Yet, we're still discussing data from September, when mortgage rates were different and home sales were slower than what they are today.
Data from September is of little value to the U.S. buyers and sellers of December.
Even then, though, characterizing Home Price Index data as "from July" is a stretch. This is because the home values used for the HPI are collected as of the actual mortgage closing -- not at the time at which the home goes under contract or is appraised.
For a purchase, it's typical for up to 90 days to lapse between a sale agreement and a closing, which means that the Home Price Index could be reporting home sale data from as far back as July 2013.
July's housing market is different from today's. Seasonal demand is different; mortgage rates are different; and the available home inventory is different.
The Home Price Index can be a useful gauge for economists and law-makers in want of long-term trends in housing. It's of less value to an active buyer or seller. Real-time data is what matters most.
For today's home buyers, rising values increase the long-term cost of homeownership. Thankfully, mortgage rates are down. Since peaking this summer, 30-year fixed rate mortgage rates are lower which can offset the effects of rising prices.
The 15-year fixed rate mortgage is also near historical lows versus its 30-year counterpart.
See how much home you can afford. Get a rate quote and a pre-approval for your pending offers. It's fast, it's free and there's no obligation whatsoever.
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.
Sarah M. Office Manager
The Mortgage Reports has been an invaluable resource to me -- it helped me to pick the sweet spot to refinance. Thanks!
I enjoy reading The Mortgage Reports. The articles are informative with lots of good stats and trends.
Thaddeus C. Systems Analyst
I am an aspiring homeowner and The Mortgage Reports helps me daily. Thank you for your excellent information.
2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.