While housing has a long way to go until it is recovered, new data reveals that one economic indicator continues slowly improving – home prices.
Housing on the right path
According to new data from the Federal Housing Finance Agency (FHFA), home prices rose for a sixth consecutive month in August, increasing 0.7 percent, marking a 4.7 percent annual increase over August 2011 levels, which is the largest year over year jump in six years.
Home prices now hover around April 2004 levels, but remain 15.9 percent below their April 2007 peak prior to the housing crash. Price gains were most prevalent in the Mountain and Pacific regions, rising 11.4 percent and 8.1 percent, respectively. Meanwhile, New England and the Middle Atlantic only rose in August by 0.4 percent, and 1.4 percent, respectively.
According to the FHFA, their data is created by analyzing “the purchase prices of houses with mortgages owned or guaranteed by Fannie Mae or Freddie Mac to calculate the monthly index,” making it a reliable indicator, but not necessarily a complete picture, despite Fannie and Freddie guaranteeing or owning the majority of American mortgages.
Historically low mortgage rates helped to boost home purchases and refinancing, as the Federal Reserve’s new bond purchase plan brought down fixed mortgage rates back to almost record lows, and while some housing economic indicators have improved, housing activity remains well below historical standards and continues to show signs of only slight growth for the remainder of the year, according to a recent Fannie Mae report.