House Prices Continue Their Ascent, Contributing to Broader Economic Recovery


According to the Federal Housing Finance Agency (FHFA), house prices rose in August, albeit at a slower month-over-month pace than in July. In August, house prices climbed by a seasonally adjusted rate of 0.3%, 0.5 percentage points slower than then 0.8% increase that took place in July. Over the past twelve months house prices have risen by 8.5%.

Month-to-month growth in U.S. house prices reflected increases in 7 of the 9 Census Divisions. The largest monthly increases took place in the Mountain division (1.3%), which includes Nevada, the West North Central division (1.2%), which includes North Dakota, and the Pacific division (0.8%), which includes California. Gains in these 7 areas of the country were partially offset by declines in the East North Central division (-0.3%), which includes Michigan, and the South Atlantic division (-0.5%), which ranges from Delaware to Florida.

Despite a deceleration in house price growth, August marks the 19th consecutive month-over-month increase in house prices. Over this period, January 2012 to August 2013, house prices have risen by 12.7% and have returned to a level last seen in April 2005, surpassing their pre-boom level. The recovery in house prices is confirmed by the NAHB/First American Leading Markets Index (LMI). This index uses house prices, permits, and employment to track the economic and housing recovery in the US. The index shows that while the U.S. is recovering from the worst of the housing bust and resulting recession, economic activity nationwide has not fully recovered. According to the LMI, the U.S. currently has a score of .85, .15 points from reaching 1.0, a full recovery. With a component score 1.18, house prices have recovered nationwide. However permit activity and employment, with component scores of .43 and .94 respectively, have yet to reach a full recovery.

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

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