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House Prices Continued to Rise in November

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Jan. 28 2016, Updated 1:15 p.m. ET

House prices rose 0.5% in November

According to the FHFA (Federal Housing Finance Agency), the HPI (House Price Index) rose by 0.5% in November—the same as October 2015. This is another month where house prices rose in line with the consensus estimate.

However, the equity market fell due to global volatility and the decline in crude prices. As a result, the iShares US Real Estate (IYR) fell by 1.6% as of January 27. Also, real estate stocks including Simon Property Group (SPG), Equity Residential (EQR), Crown Castle International (CCI), and Public Storage (PSA) fell by 2.2%, 1.8%, 0.5%, and 2.1%, respectively, as of January 27.

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12-month changes remain positive in November

The FHFA HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.

Over the past year, home prices rose by 5.9% in November—compared to 6.1% in October 2015.

The 12-month changes were all positive. They ranged from +2.6% in the Middle Atlantic division to +10.0% in the Mountain division.

For the nine census divisions, the monthly price changes from October 2015 to November 2015 ranged from -0.4% in the West South Central division to +1.8% in the Mountain division.

While the rest of the sectors are facing the heat of China’s slowdown and falling crude, home prices continued to rise in November. With an increase in home prices, builders might increase the home supply. This could give buyers more choices. With a decline in mortgage rates, more potential customers could be attracted to the housing sector.

With house prices rising, let’s see how mortgage applications are catching up.

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