Home Price Growth Beats Economists' Expectations in May

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The Federal Savings Bank shares news of how home prices increased in May.

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On a year-over-year comparison, all nine census divisions posted gains.

Lenders like The Federal Savings Bank were pleased to read the report from The Federal Housing and Finance Agency (FHFA) that said home prices rose 0.4 percent month over month in May.

Further, the House Price Index, which uses data from mortgages sold to or guaranteed by Fannie Mae or Freddie Mac, showed a 5.5 percent gain compared to May 2013, though the national index is 6.5 percent below the peak set in April 2007. The current reading is almost the same as the July 2005 index, which is prior to the housing downturn.

On a year-over-year comparison, all nine census divisions posted gains, with the Pacific division notching a 9.6 percent increase to top to list.

According to Bloomberg on July 22 in a piece titled “U.S. Home Prices Increased More Than Estimated in May”, the gains for May were higher than what economists had predicted. The news source had collected data that anticipated there would be a 0.2 percent rise from April.

"The current conditions are more encouraging for buyers," Stephanie Karol, U.S. economist for IHS Global Insight in Lexington, Massachusetts, told Bloomberg. "As price gains moderate and wage growth and employment growth pick up, buyers will be in a better position to make a purchase."

The Federal Savings Bank agrees that this information is encouraging; this news is uplifting after the U.S. Census Bureau dismally revised their May new home sales lower. Federal Savings Bank also encourages prospective homebuyers to come forth and get pre-approved for a home loan. Homebuyers should prepare themselves for a property purchase before home prices move even higher.

For information about getting a low rate mortgage to keep up with price appreciation, contact the Federal Savings Bank, a veteran owned bank.

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Giorgio Urbano Ferrero
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