Home prices posted their largest-ever yearly gain since the inception of the Federal Housing Finance Agency (FHFA) House Price Index more than a decade ago.
Home prices across the country rose 18.5% year-over-year, a 4.2% increase from the second quarter of 2021. Home prices in the U.S. Census Bureau’s mountain division — Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming — rose a staggering 25% from the third quarter of 2020 to the third quarter of 2021.
Idaho saw the greatest home-price appreciation in the nation, with a 35.8% yearly increase. Utah followed with a 30.3% increase, while Arizona saw the third-greatest increase in its home prices, rising 27.7% year-over-year.
Home prices rose in each of the 100 largest metropolitan areas the FHFA tracks, but Boise, Idaho saw the largest increase. House prices in the Idaho state capital rose 35.8% year-over-year.
“House price appreciation reached its highest historical level in the quarterly series,” said William Doerner, FHFA’s supervisory economist in the division of research and statistics. “Compared to a year ago, annual gains have increased in every state and metro area.”
In 2021, the message became clear: mortgage lenders must adapt to survive. In this white paper, we will examine how D2C lenders are poised for success in 2022 and what strategies traditional lenders can adopt from them moving forward.
Presented by: Nomis Solutions
In a YouTube video released to accompany the report, Doerner said that a limited supply of homes, coupled with strong consumer demand for them, resulted in higher prices across the country. Historically low mortgage rates also fueled the housing market.
High demand and short supply has become a mantra in the housing industry. There are signs, however, that the rate of home-price appreciation is starting to decelerate, Doerner said.
“Real estate prices have risen exceptionally fast, but market momentum peaked in July as month-over-month gains have moderated,” said Doerner.
Later today, based on its House Price Index and a formula set by statute, the FHFA will announce new conforming loan limits. Due to home-price appreciation, the new limits are expected to reach nearly $1 million.
Some lenders, including PennyMac and United Wholesale Mortgage, have already raised their conforming loan limit ceilings, in anticipation of the regulator’s announcement.