BAM Key Details:

  • The latest Fannie Mae Home Price Index reading shows a 3.0% annual increase in home prices from Q2 2022 to Q2 2023—a smaller annual uptick than for Q1 2023. 
  • On a quarterly basis, home prices saw a seasonally adjusted increase of 1.9% from Q1 2023 to Q2—up from a 1.3% quarterly increase for Q1. 

Fannie Mae just released its latest Home Price Index (FNM-HPI) reading for Q2 2023, showing a 3.0% annual increase in home prices—down from the first quarter’s revised annual growth rate of 4.9%. 


Source: Fannie Mae

From Q1 2023 to Q2, home prices increased 1.9% on a seasonally adjusted basis—up from 1.3% growth from Q4 2022 to Q1 2023. 

On a non-seasonally adjusted basis, home prices rose 3.6% in the second quarter of 2023. 

Once again, home price growth surprised to the upside. Housing demand remains resilient, which continues to butt up against the near-historically limited supply of existing homes for sale. Moreover, the ‘lock-in effect,’ in which homeowners are disincentivized to list their homes for sale because of how high mortgage rates have risen, is seriously inhibiting the supply of existing homes available for sale. At nearly 8 percent on a seasonally adjusted annualized basis, this past quarter’s home price growth was well above the historical average.

With the 30-year mortgage rate once again approaching 7 percent, it’s yet to be seen whether mortgage demand will finally cool in response, or whether higher rates will simply further suppress supply. If the latter, we expect additional near-term home price appreciation. One consequence of the stronger home price environment is that new home construction is well-supported. Unfortunately, any hopes of a better-balanced home supply situation may rest on the ability of homebuilders to meet ongoing demand.

The Fannie Mae Home Price Index (FNM-HPI)

The Fannie Mae Home Price Index measures the average quarterly and annual price change for single-family properties in the U.S., excluding condos. 

Findings are based on county-level data aggregated to generate both seasonally adjusted and non-seasonally adjusted national indices, representative of the entire U.S., to track and measure general trends in single-family home prices. 

Fannie Mae publishes the index around the middle of the first month of each quarter. The full index is publicly available as a quarterly series starting Q1 1975 and extending to its most recent edition, which is currently Q2 2023. 

Takeaways for real estate agents

As Fannie Mae’s Senior Vice President and Chief Economist Doug Duncan has pointed out, home prices have once again surprised housing economists on the upside, thanks to a combination of historically-low housing inventory and resilient buyer demand. 

Given the most likely outcome of the next FOMC meeting, mortgage rates could rise above 7% yet again, driving up the cost of home purchases. But as consumers come to terms with that higher cost, the impact on demand may be negligible. 

After all, once rates start to drop again, demand for available homes will only increase, making competition worse than it is now. That sounds great for sellers; for buyers, not so much.