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FHFA Says House Price Index for 17th Consecutive Quarter

Price increases did not slow in the third quarter as expected the Federal Housing Finance Agency (FHFA) said today. The agencies purchase-only seasonally adjusted House Price Index (HPI) for the quarter shows that prices rose for the 17th consecutive quarter and posted the largest month-over-month gain since at least that in March to April.

The combined report for September and for the third quarter is based on home sales price information taken from mortgages sold to or guaranteed by the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The monthly index rose 0.8 percent from August and the quarterly measure was 5.7 percent higher than in the third quarter of 2014. Year-over-year the increase for the entire U.S. was 6.1 percent.

The 8 percent monthly gain crushed analysts expectations. According to Bloomberg predictions for an increase ranged from 3 to 5 percent.

"The long-anticipated slowdown in home price appreciation did not occur in the third quarter," said FHFA Principal Economist Andrew Leventis. "The factors that have contributed to extraordinary price growth over the last few years-low interest rates, tight inventories, strong buyer confidence, and improving income growth-continued to drive prices upward in much of the country. However, as prices continue to rise, reduced affordability will be a stronger market headwind," Leventis said.

Further, when viewed against the prices of other goods and services, which fell by 1.3 percent from the same quarter in 2014 the 5.7 percent increase becomes an inflation adjusted 7.1 percent.

Home prices rose on an annual basis in 49 states and the District of Columbia with the exception of West Virginia. The price leaders were the District of Columbia, up 15.4 percent, Colorado, a 12.7 percent increase, Nevada at 12.4 percent, Oregon and Florida both with 10.0 percent gains

The metropolitan area with the strongest four-quarter price appreciation was North Port-Sarasota-Bradenton, FL, where prices increased by 16.1 percent. Prices were weakest in El Paso, TX, where they fell 3.6 percent.

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