Chart of the Week: FHFA Purchase-Only House Price Index
(Image courtesy of MBA; Source: Federal Housing Finance Agency)
Annualized home price growth in the U.S. peaked between the second half of 2021 and first half of 2022 before decelerating through most of 2023 as rising mortgage rates and tight inventory contributed to a pullback in demand. However, these price trends varied considerably between geographies because of factors such as housing demand, population flows, the availability and affordability of housing, and local economic conditions. This week’s Chart of the Week shows house price growth trends relative to January 2020 and tracks how these varied across census divisions. House prices were up 54.6% overall for the U.S. as of October 2024 and showed price gains ranging from 43.8% in the Pacific to 63.1% in the New England, relative to January 2020. Three divisions had cumulative price growth lower than the national average while six divisions had higher home price growth.
The Pacific division, which saw robust annualized price growth in 2021 also saw the largest deceleration in 2022 and 2023 but has seen a gradual pickup in recent months. On the other end of the spectrum, the New England division had the highest home price growth relative to 2020 but did not have any large price swings and experienced steady growth throughout the charted period. Every division in between saw its own unique home price path relative to 2020 based on the market factors outlined above.
MBA’s forecast is for national home price growth to decelerate from 4.4% annualized growth to a range of 1.3% to 2% from 2025 to 2027. However, as noted in this week’s chart, house price growth will likely continue to show a wide range across the country given the unique dynamics of each market. Moderation in home price growth should help to ease some affordability pressures for new buyers as mortgage rates remain above the 6% mark over the next few years. In November, MBA’s Purchase Application Payment Index (PAPI), which is adjusted for wage growth, was 163.3, up 46% from January 2020’s index, showing the erosion in affordability for new buyers. The national median mortgage payment on a new purchase mortgage was $2,133, compared to $1,191 in January 2020.
–Joel Kan (jkan@mba.org)
