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Home Price Growth Reaccelerates in Q4

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The housing market needs mortgage rates to decrease to help unwind the lock-in effect and thaw the supply of existing homes for sale, Fannie Mae said.

 

WASHINGTON — Single-family home prices nationally increased 5.8% from Q4 2023 to Q4 2024, an acceleration from the previous quarter's downwardly revised annual growth rate of 5.4%, according to the latest reading of the Fannie Mae Home Price Index (FNM-HPI).

 

On a quarterly basis, home prices rose a seasonally adjusted 1.7% in Q4 2024, up from the downwardly revised 1.2% growth rate in Q3 2024. On a non-seasonally adjusted basis, home prices increased just 0.3% in Q4 2024. The FNM-HPI is a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the United States, excluding condos.

 

"Year-over-year home price growth accelerated in the fourth quarter, following back-to-back quarters of deceleration," said Mark Palim, Fannie Mae senior vice president and chief economist. "Inventories of existing homes for sale have improved from a year ago but remain historically low, due largely to the so-called 'lock-in effect.' Since the beginning of October, mortgage rates have rebounded after bottoming out around 6.1% and are now inching closer to a new psychological barrier, the 7% threshold. The higher mortgage rate environment is not only hurting affordability, but it's also exacerbating the lock-in effect by further reducing homeowners' incentive to move."

 

Palim continued: "The housing market in 2025 faces a difficult balancing act, with a notable decline in mortgage rates likely needed to help unwind the lock-in effect and thaw the supply of existing homes for sale. However, we believe such a decline would likely jumpstart demand from potential first-time homebuyers currently waiting to purchase, which could lead demand to outpace any improvement in supply, further exacerbating already-high home prices and purchase affordability."

 

Methodology: The FNM-HPI is produced by aggregating county-level data to create both seasonally adjusted and non-seasonally adjusted national indices that are representative of the whole country and designed to serve as indicators of general single-family home price trends. The FNM-HPI is publicly available at the national level as a quarterly series with a start date of Q1 1975 and extending to the most recent quarter, Q4 2024. Fannie Mae publishes the FNM-HPI approximately mid-month during the first month of each new quarter.

 

Source: Fannie Mae

 

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