Home prices in the U.S. have been rising for more than a decade

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Although house appreciation has been increasing over the past 12 years, the rate of increase is beginning to decrease.

In the second quarter, overall U.S. home prices increased 5.7% over the same period last year, per a study released on August 27 by the Federal Housing Finance Agency. Since the beginning of 2012, the housing market has now shown positive yearly appreciation every quarter.

However, according to Anju Vajja, deputy director of the FHFA's division of Research and Statistics, the rate of growth has slowed over the last three quarters, most likely as a result of increased inventory and higher mortgage rates.

The figure is consistent with statistics from the most recent Case-Shiller U.S. National Home Price Index, which was released on August 27 and indicated a 5.4% increase in June compared to the previous year. Case-Shiller utilizes a composite of single-family house pricing data for the nine U.S. Census divisions, whereas the FHFA bases its index on loan purchasing data from Fannie Mae and Freddie Mac.

Northeastern gains in double digits: The FHFA study indicates that the Northeastern states had the fastest increases in house appreciation in Q2. With a 13.4% increase from the previous year, Vermont had the largest gain, followed by West Virginia (up 12.3%) and Rhode Island (up 10.1%).

Louisiana (up 1.2%) and Idaho (up 1.1%) had the poorest growth rates for house appreciation.

According to the FHFA, among metro regions, Austin, Texas, and Fort Myers, Florida, each saw a 3.2% decrease in value from the previous year, while Syracuse, New York, saw the largest annual increase at 14.2%.

NYC is No. 1: Year-over-year increase was observed in all 20 metro areas in the Case-Shiller composite ranking, with New York City growing at the greatest rate (up 9%), and Portland, Oregon growing at the slowest rate (up 0.8%).

Although price gains in the Case-Shiller index have slowed recently, Lisa Sturtevant, chief economist at Bright MLS, said the growth is "still remarkable" given the record-high home prices and mortgage rates, which were close to 7% in the second quarter.

Sturtevant added, "At this point, there is no evidence that we will see a major home price drop nationally in 2024." This is because inventory is still low by historical norms.

However, she noted that as supplies increases and seasonality drives down prices, there might be some slight respite this autumn.