U.S. Single-Family Home Prices Rise in August

WASHINGTON (Reuters) – U.S. single-family home prices increased in August amid tight supply, which, combined with elevated mortgage rates, continues to keep prospective buyers on the sidelines.

House prices rose 0.3% on a month-on-month basis after gaining 0.2% in July, according to the Federal Housing Finance Agency. They increased 4.2% in the 12 months through August, following an upwardly revised 4.7% advance in July. The rise in annual house prices was previously reported as 4.5%.

Mortgage rates initially dropped after the Federal Reserve began cutting interest rates last month, but they have risen over the past four weeks as solid economic data forced traders to surrender hopes for another 50-basis-point rate cut next month. The average rate on the popular 30-year fixed-rate mortgage rose to 6.54% last week from 6.44% in the prior week, according to data from mortgage finance agency Freddie Mac.

Many homeowners have mortgage rates below 4.0%, reducing the incentive for them to put their houses on the market, especially if they have to buy a new place.

"The slow but continued house price growth and the effect of locked-in interest rates led to persistent housing affordability challenges," said Anju Vajja, deputy director for FHFA's Division of Research and Statistics.

There were solid monthly house price increases in the West North Central, West South Central, and Middle Atlantic regions. However, monthly house prices fell in the East North Central and New England regions.

All nine census regions recorded annual house price gains, with significant increases in the East North Central, New England, Middle Atlantic, East South Central, and West North Central areas. Moderate gains were seen in the West South Central, Mountain, and Pacific regions.