House Prices See Steady Gains

Nationally, house prices continued to rise in May, contributing to the overall recovery for U.S. housing markets. According to the most recent release by the Federal Housing Finance Agency, U.S. house prices rose by 0.7% on a month-over-month seasonally adjusted basis in May. This is the sixteenth consecutive monthly increase for the House Price Index – Purchase Only. Since January 2012, house prices have risen by 10.4%.

The May increase in house prices was geographically widespread, increasing in every division of the country. As the chart below illustrates, the largest month-over-month gains took place in the Pacific and Mountain divisions, regions of the country containing states like Nevada and California that experienced the largest price declines in recent years.


The recovery in house prices has contributed to the ongoing repair in household balance sheets. In aggregate, rising house prices and falling mortgage debt have resulted in greater housing equity and household net worth. At the same time however, disposable personal income declined in the first quarter of 2013 due to factors such as higher payroll taxes. If disposable personal income growth continues to lag house price appreciation, then potential first-time home buyers may find their ability to buy a home more difficult.

For full histories of the FHFA US and 9 Census divisions, click here.

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