Single-family home prices increased at a non-seasonally adjusted annual rate of 9.2 percent in the fourth quarter of 2022, down from the previous quarter’s revised annual growth rate of 13.1 percent. This is according to Fannie Mae’s latest Home Price Index (FNM-HPI), according to a Fannie Mae release.
The report is a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the United States, excluding condos. On a quarterly basis, home prices rose a seasonally adjusted 0.2 percent in the fourth quarter, just above the 0.1 percent growth seen in the third quarter. On a non-seasonally adjusted basis, home prices declined by 1 percent in the fourth quarter.
“The rise in mortgage rates over the past year and record inflation have constrained the purchasing power of prospective homebuyers,” Fannie Deputy Chief Economist/Vice President Mark Palim said in the release. “The resulting affordability pressures are evident in the home price declines of the past two quarters, along with the downturn in homes sales. The rise in rates also exacerbates the ‘lock-in effect’ in which existing homeowners who have rates well below current market rates have a financial disincentive to give up their current mortgage and purchase a different home at a higher mortgage rate, thereby reducing the supply of homes available for sale.
“We believe that a key factor that will impact home prices in 2023 is how the tension between a reduced supply of homes available for sale and lower mortgage demand is resolved,” Palim added.
The FNM-HPI is produced by aggregating county-level data to create both seasonally adjusted and non-seasonally adjusted national indices that are representative of the whole country and designed to serve as indicators of general single-family home price trends.