Washington, D.C. – U.S. house prices rose 1.4 percent in the third quarter of 2017 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI).   House prices rose 6.5 percent from the third quarter of 2016 to the third quarter of 2017.  FHFA's seasonally adjusted monthly index for September was up 0.3 percent from August. 

The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.  FHFA has produced a video of highlights for this quarter. 

"With relatively favorable economic conditions and a continued shortage of housing supply, price increases in the third quarter were generally robust and widespread," said Andrew Leventis, Deputy Chief Economist.  "At some point, declining housing affordability should temper appreciation rates in some of the nation's fastest appreciating markets, but our third quarter results show few signs of that."

Significant Findings

• Home prices rose in 50 states and the District of Columbia between the third quarter of 2016 and the third quarter of 2017.  The top five areas in annual appreciation were:  1) District of Columbia 11.6 percent; 2) Washington 11.5 percent; 3) Hawaii 10.0 percent; 4) Arizona 10.0 percent; and 5) Nevada 9.6 percent.

• Home prices rose in each of the 100 largest metropolitan areas in the U.S. over the last four quarters.  Annual price increases were greatest in the Seattle-Bellevue-Everett, WA (MSAD), where prices increased by 14.6 percent.  Prices were weakest in Camden, NJ (MSAD), where they rose 0.5 percent.
  
• Of the nine census divisions, the Pacific division experienced the strongest annual appreciation, posting an 8.9 percent gain since the third quarter of last year and a 1.7 percent increase since the second quarter of 2017.  House price appreciation was weakest in the Middle Atlantic division, where prices rose 4.8 percent annually.
  
• Tables and graphs showing home price statistics for metropolitan areas, states, census divisions, and the U.S. as a whole are included on the following pages.
  

Other Price Indexes
Most statistics in the quarterly house price index report reference price changes computed by FHFA's basic "purchase-only" HPI.  In some cases, however, the reported statistics reference alternative price measures.  FHFA publishes – and makes available for download – three additional house price indexes beyond the basic "purchase-only" series.  Although they use the same general methodology, the three alternatives rely on slightly different datasets as follows: 

• "Distress-Free" house price index.  Sales of bank-owned properties and short sales are removed from the purchase-only dataset prior to estimation of the index.

• "Expanded-Data" house price index.  Sales price information sourced from county recorder offices and from FHA-backed mortgages are added to the purchase-only data sample.  This index is used annually to adjust the maximum conforming loan limits, which dictate the dollar amount of loans that can be acquired by Fannie Mae and Freddie Mac.

• "All-Transactions" house price index.  Appraisal values from refinance mortgages are added to the purchase-only data sample.

Data constraints preclude the production of all types of indexes for every geographic area, but multiple index types are generally available.  For individual states, for instance, three types of indexes are available.  The various indexes tend to correlate closely over the long-term, but short-term differences can be significant. 

Background

FHFA's HPI tracks changes in average home prices by analyzing changes in home values for the individual properties.  The underlying "repeat-transactions" methodology constructs index estimates by statistically evaluating price appreciation (or depreciation) for homes with multiple values over time.  The purchase-only HPI uses sales price information from Fannie Mae- and Freddie Mac-purchased and Enterprise-guaranteed mortgages originated over the past 42 years.  The purchase-only HPI is estimated with more than eight million repeat transactions.  A video shows the basic methodology behind the FHFA HPI.

Note

• The next monthly HPI report (including data through October 2017) will be released December 21, 2017 and the next quarterly HPI report (including data for the fourth quarter of 2017) will be released February 27, 2018.
• Future HPI release dates for 2018 are available at https://www.fhfa.gov/hpi.
• Follow @FHFA on Twitter, LinkedIn and YouTube for more HPI news.