Price Appreciation Cooled Slightly In Q4 2021

Home prices rose 17.5% year-over-year in Q4 2021 and 3.3% from Q3 2021, according to the Federal Housing Finance Agency’s House Price Index (FHFA HPI).

Home prices were up 1.2% from November to December.

Home prices increased in every state between Q4 2020 and Q4 2021, with the highest appreciation in Arizona (27.4%), Utah (27.1%), Idaho (27%), Florida (25.6%), and Tennessee (24.1%). Cape Coral-Fort Myers, FL, saw the greatest annual price increases.

The metros with the least annual appreciation were Washington, D.C. (6.6%), Louisiana (10.2%), North Dakota (10.3%), Maryland (10.8%), and Alaska (11.3%). 

“House prices continued to climb but not as rapidly during the final quarter of 2021 as in earlier quarters,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. 

“Housing trends over the past year have created challenges. The quick house price gains may be counterbalanced as mortgage rates increase. However, more expensive housing has elevated affordability to become a broader concern as available supply remains limited.”

“Million-dollar cities” skyrocketed in 2021, with the number of cities where the average home is worth $1 million or more reaching 481. An additional 49 cities could make the list by mid-2022 if appreciation continues at its current rate.

The U.S. housing opportunity index has fallen to 54%, down from 79% in Q1 2012. That means just over half of all homes sold last quarter are affordable for families earning the median income of $54,200.

“A number of families, especially would-be first-time buyers, are increasingly being forced out of the market, and this is why supply is critical to expanding homeownership opportunity,” Lawrence Yun, chief economist for the National Association of Realtors, said of housing affordability.

“The good news is that home prices should begin to normalize later in 2022 as more homes come on the market.”

The FHFA HPI is a collection of public, freely available house price indexes that measure changes in single-family home values based on data from all 50 states and over 400 American cities, extending to the mid-1970s.