Home Prices Continue to Improve Across the United States

Americans hoping to refinance their mortgages or purchase new homes are breathing a sigh of relief that the housing market is providing some good news.  The US Federal Housing Finance Agency (FHFA) reported that home prices rose 0.7 percent higher in August than where they were in July, continuing a yearlong increase of 4.7 percent.  This is good news for buyers because it is a sign the housing market is beginning a steady recovery.

However, the FHFA did report that the steady increase was not consistent across the country.  In the states along the west coast, including the separated states of Alaska and Hawaii, home prices saw the highest increase of 3.0 percent from July to August.  California in particular reported fewer home foreclosures throughout the summer, a possible sign that mortgages are more affordable for the average homeowner than they were previously.  However, southeastern states such as Alabama and Mississippi reported home prices decreasing 0.5 percent.

Part of the price increase can be attributed to the Federal Reserve’s intervention in the housing market, bringing fixed mortgage rates down to near record low levels.  By keeping the central interest rates locked in at record lows, mortgages become more affordable for the average American homebuyer, thereby fueling greater demand in the market.  As home prices increase, it means there is a higher level of demand because lower mortgage rates are encouraging more Americans to take the opportunity to work out a deal.

The FHFA reported home prices are still approximately 16 percent below peak levels achieved in April 2007 in large part due to the recession, but the recent increase in home prices is indeed a good sign the market may finally be hitting a positive stride.