U.S. house prices jumped 1.8 percent in the second quarter from the previous three months, fueled by record-low mortgage rates and tight inventory, according to the Federal Housing Finance Agency.
The seasonally adjusted increase was the biggest since the fourth quarter of 2005, the FHFA said in a statement today from Washington. Prices climbed 3 percent from a year earlier.
Job gains, low borrowing costs and a limited supply of properties for sale are providing a foundation for price gains and helping homeowners gain equity. The number of Americans who owed more than their homes were worth fell by about 400,000 in the second quarter, according to a report today by Zillow Inc.
“We have definitely hit a bottom in home values nationally, but we don’t expect to see them continue to rise as quickly as they are now,” Stan Humphries, chief economist for Seattle-based real estate information service, said yesterday in an e-mail. “As more homeowners rise out of negative equity, many will try to sell their homes, adding to supply and causing price appreciation to moderate.”
House prices in June increased 0.7 percent from May, according to the FHFA, whose report is based on single-family houses with mortgages backed by Fannie Mae or Freddie Mac. The average estimate of 13 economists in a Bloomberg survey was for a 0.6 percent gain.
On a monthly basis, seven of the nine regions covered by the by the gauge showed increases after adjusting for seasonal variations. The gains were led by a 3.5 percent jump in the area that includes Arizona and Nevada. Prices fell 0.2 percent percent in New England and the region that includes Texas and Arkansas.
“Although some housing markets are still facing significant challenges, house prices were quite strong in most areas in the second quarter,” Andrew Leventis, FHFA principal economist, said in the statement. “The strong appreciation may partially reflect fewer homes sold in distress, but declining mortgage rates and a modest supply of homes available for sale likely account for most of the price increase.”
New-home sales rose 3.6 percent in July to a 372,000 annual pace, matching a two-year high, figures from the Commerce Department showed today in Washington. There were 142,000 new houses on the market at the end of July, the fewest in data going back to 1963.
Purchases of previously owned homes climbed 2.3 percent to a 4.47 million annual rate in July, up from an eight-month low, the National Association of Realtors said yesterday. At that pace, it would take 6.4 months to sell all the existing properties on the market, compared with 6.5 months at the end of June, the group said.
The FHFA report doesn’t provide a specific price for homes. The median price of an existing home, as measured by the National Association of Realtors, was $188,800 in June, up from $180,300 in May.