US October Housing Price Index Rises 0.4%, Now 6% Above 2007 Peak

The Federal Housing Finance Agency (FHFA) house-price index rose 0.4% in October, which was in line with consensus expectations and followed a 0.6% increase for September to give a 6.2% annual advance.

On a monthly basis there was a 0.6% decline in prices for East South central region with prices also declining in the West South Central area with the largest monthly gain in the Mountain region at 1.2%.

There were positive annual readings across all divisions with the Mountain region also recording the strongest annual growth rate at 8.3%. The slowest rate of increase was in the Middle Atlantic at 3.6%.

Prices are now 6.0% higher than the previous March 2007 peak and over 30% above the 2011 first-quarter trough.

Overall confidence in the housing sector will remain strong in the short term, but it will be increasingly difficult to sustain a rate of increase in house prices, which out-strips the growth in incomes, especially as there are already important affordability issues, which will tend to undermine the potential for further price increases.

Rising bond yields will also pose additional risks to the market, especially if there is a further increase in yields during the first few months of 2017.

There was no significant market reaction with the dollar struggling to sustain gains seen after the GDP data earlier as position adjustment dominated.

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Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.