Today, FHFA released their housing price index data for November which showed that house prices rose 0.8 percent from October on a seasonally adjusted basis.
That rate of growth is the highest one-month growth rate reported by FHFA since December 2013; it would translate into an annual price growth of 10 percent.
While month to month data can be somewhat volatile, looking at the year over year data, we see a similar acceleration though not yet that strong. From one year ago, home prices were up by 5.3 percent, according to the FHFA, very close to the 5.6 percent change reported in NAR’s median price in November.
Both FHFA and NAR data showed that the November annual growth rate in prices was higher than that observed in previous months. Tomorrow, NAR will release December price and sales data, and we’ll get a first look at whether the acceleration in home price growth will continue. As long as tight housing inventory persists, which we expect to see as long as housing starts remain at a subpar level, we expect to see upward pressure on home prices which adds an additional challenge to potential first-time buyers.
In addition to national data, FHFA releases data at the Census division level. The most robust gains in FHFA data from a year ago were still in the West though other Census divisions were stronger than the Mountain division. NAR data showed less strength in prices in the West.
According to FHFA year over year prices rose 7.5 percent in the Pacific division which includes Hawaii, Alaska, Washington, Oregon, and California and 5.6 percent in the Mountain division which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico. But divisions that make up the South region actually had growth in excess of 6 percent from a year ago.
NAR and FHFA data both showed the smallest price gains from November a year ago in the Northeast. NAR showed that prices grew by 2.0 percent in the Northeast and FHFA showed that prices rose 1.6 percent in New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut) and 2.1 percent in the Middle Atlantic states (New York, New Jersey, Pennsylvania) from one year ago.
NAR reports the median price of all homes that have sold while FHFA reports the results of a weighted repeat-sales index. For this reason, the trends in the NAR median price can differ from the trends in the weighted repeat sales index—which computes price change based on repeat sales of the same property, but they typically track very closely and the timeliness of the NAR median price data makes it a good early indicator of price conditions in the housing market.
FHFA sources data primarily from Fannie and Freddie mortgages, transactions using prime conventional financing, and misses out on cash transactions as well as jumbo, subprime, and government backed transactions such as those using VA or FHA financing while NAR uses data reported from Realtor-assisted transactions in the MLS.