U.S. house prices rallied again in the third quarter of 2023. In fact, home prices rose 2.1% quarter over quarter and 5.5% year over year in Q3, according to the Federal Housing Finance Agency (FHFA) House Price Index.
Month over month, the FHFA’s seasonally adjusted monthly index ticked up 0.6% in September.
“U.S. house price growth continued to accelerate in the third quarter, appreciating more than in each of the previous four quarters,” Anju Vajja, principal associate director in FHFA’s division of research and statistics, said in a statement.
“House prices rose in the third quarter in all census divisions and are higher than one year ago, driven primarily by a low supply of homes for sale.”
Home prices appreciated in almost all 50 states year over year. Vermont, Maine, New Hampshire, Connecticut and New Jersey recorded the highest annual appreciation rates, posting +11.8%, +11.1%, +10.3%, +9.9% and +8.7% in home-price gains, respectively.
Meanwhile, the two areas with the most significant annual price depreciation were Hawaii and the District of Columbia, posting negative rates of appreciation, -0.9% and -0.8%.
Zooming in on metropolitan areas, home prices rose in 93 of the top 100 largest metropolitan areas. Albany-Schenectady-Troy, New York, ranked first, posting the biggest annual appreciation rate at +12.4%. Meanwhile, Austin-Round Rock-Georgetown, Texas, recorded the biggest year-over-year decline of -5.0%.
Overall, the New England census division recorded the strongest appreciation, posting a 9.2% increase. The Pacific division recorded the smallest four-quarter, home-price appreciation rate at 2.0%.
Home-price growth expected to slow in Q4
High mortgage rates combined with a typical seasonal slowdown will limit the number of buyers on the market in Q4, Bright MLS Chief Economist Lisa Sturtevant said in a statement.
Simultaneously, new listing volume is up at the end of November, which might further cool home prices.
“Home prices are feeling the weight of high mortgage rates which will slow the rate of price growth in the coming months,” CoreLogic Chief Economist Selma Hepp said in a statement.
