The Federal Housing Finance Agency (FHFA) said today that home prices in the fourth quarter of 2014 were up 1.4 percent compared to the previous quarter and 4.9 percent from the fourth quarter of 2013.  The fourth quarter was the fourteenth consecutive one in which the agency's purchase only House Price Index (HPI) increased on a seasonally adjusted basis from the prior quarter. 

The monthly HPI for December, also reported today, was up 0.8 percent from November. This measure has increased for 23 of the last 24 months with the single decreased registered in November 2013

FHFA's index is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.  An expanded data index using transaction information from county recorders' offices and the FHA was up 1.3 percent quarter-over-quarter and was 6.0 percent higher than in the fourth quarter of 2013.

"Contrary to prior indications of a possible slowdown, home price appreciation in the fourth quarter was relatively strong," said FHFA Principal Economist Andrew Leventis.  "The key drivers of appreciation over the last few years-low inventories of homes available for sale, and improvement in labor markets-likely played a role in driving up prices during the quarter."

The 4.9 percent annual increase in home prices from the fourth quarter of 2013 outpaced the increase in prices of other goods and services significantly with the latter rising only 0.4 percent during the same period.  Thus the inflation-adjusted price of homes rose approximately 4.5 percent over the latest year.

Year-over-year the purchase-only HPI rose in 48 states and the District of Columbia.  The top five areas in annual appreciation were the District of Columbia, up 12.5 percent; Nevada with a  9.0 percent increase, North Dakota which gained 8.4 percent followed by Colorado (7.9 percent), and Michigan (7.8 percent.)

Among the 100 most populated metropolitan areas in the U.S., fourth quarter price increases were greatest in the San Francisco-Redwood City-South San Francisco, CA area, where prices increased by 6.0 percent.  Prices were weakest in the El Paso, TX MSA, where they fell 6.6 percent.

Of the nine census divisions, the Mountain division experienced the strongest increase in the fourth quarter, posting a 1.8 percent quarterly increase and a 5.5 percent annual increase. House price appreciation was weakest in the New England division, where prices fell .03 percent. 

FHFA's purchase-only index is based on more than 7 million repeat sales transactions. It as well as FHFA's all-transactions index are based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over the past 39 years.