According to the statistics provided by the Federal Housing Finance Agency (FHFA), housing prices in the country moved upwards by 1.8% in the second quarter of 2012 in comparison to that of the first quarter. The data provided by the FHFA reveals that the purchase-only seasonally adjusted Home Price Index (HPI) increased by 3% in the second quarter of 2012 in relation to the second quarter figure of 2011. Again, for the month of June 2012, the Agency’s seasonally adjusted monthly index rose by 0.7% from that of May 2012 figure. If the growth in the housing prices is calculated on an annualized basis, the quarterly growth rate of home prices is 7.22%.
The rise in the housing prices was witnessed in majority of the states. In fact, in the second quarter of 2012, out of the total 51 states in the country, Home Price Index moved northwards in 43 states. Out of the 9 census divisions, home price increased in 8 divisions with only exception in New England where the HPI remained unchanged at -0.03%. Another worst performer, on an annual basis, was Middle Atlantic division where the HPI on an annual basis was -0.4%. Home prices rose by the biggest margin in the Mountain division. In the Mountain division, home prices increased by 4.17% on a quarterly basis and by 11.1% on a yearly basis.
In the aftermath of the sub prime mortgage crisis, the housing market in the country has not yet recovered thoroughly. Currently, in order to bring some stability in the market, the lenders across the board, are putting in many restrictions in eligibility. Loan applications are now being assessed meticulously by the lenders before loan approval. This might be the reason that in more recent times, the mortgage market is gradually showing some signs of improvement.
The rise in the home prices in the second quarter of this year has outpaced the rise in the general price level in the country. This may serve as a clarion call of an increased activity in the mortgage market in the coming days. Anyways, according to the statistics provided by the FHFA, while the prices of other goods and services increased by 1.7% in the second quarter of 2012 in comparison to the second quarter figure of 2011, during the same period, HPI increased by 3%. This implies that over the year, inflation adjusted home prices moved upwards by 1.3%.
Anyways, the home prices beating inflation implies that, house prices are becoming more costly than the rise in the general price level. It may be because of the fact that the demand for home in the country is rising in the country in respect to the supply of homes.