US home prices rise as Iran war drives mortgage costs higher

# US Home Prices Rise in August as Higher Mortgage Rates Pressure Buyers

Single-family home prices in the United States continued to rise in August, even as higher mortgage rates weighed on housing demand and intensified concerns about affordability, according to data released Tuesday by the Federal Housing Finance Agency (FHFA).

The agency reported that home prices increased 0.3% between July and August. However, it revised July's monthly gain downward to 0.2%, from the previously reported 0.3%.

Over the 12 months ending in August, home prices climbed 2.4%, slightly below the 2.5% annual increase recorded in July. The figures indicate that prices are continuing to grow, although the pace of annual appreciation has moderated.

## Mortgage Rates Add to Affordability Challenges

The latest housing data comes as prospective buyers face the combined pressure of elevated home prices and rising borrowing costs. Higher mortgage rates increase monthly payments and make it more expensive for households to finance property purchases.

According to Reuters, mortgage rates have climbed amid the US-Israeli war with Iran and inflationary pressures associated with the conflict. Freddie Mac data cited by Reuters showed that the average rate on a 30-year fixed-rate mortgage reached 7.32% last week.

The rate had increased by more than 140 basis points since the conflict began at the end of February, although it eased slightly in the latest weekly reading.

The increase in financing costs has added another obstacle for buyers already struggling with housing affordability. These concerns have also become a prominent issue in political messaging ahead of the November 3 midterm elections.

## Regional Home Price Trends Vary

The FHFA figures show that home price movements differed considerably across the country's nine census divisions in August.

The East South Central division recorded the strongest monthly increase, with prices rising 2.1%. In contrast, New England experienced the largest decline, as home prices fell 0.8% over the month.

Prices also increased in the West North Central, West South Central and East North Central divisions. The Middle Atlantic division recorded no monthly change. Overall, five of the nine divisions reported month-over-month price gains.

Despite the variation in monthly performance, all nine divisions recorded annual price increases through August.

The East North Central division posted the largest year-over-year gain, at 4.4%. The Mountain division recorded the smallest increase, with prices rising 0.5%.

These differences highlight how national housing trends can mask substantial variations among regional markets, where local supply, demand and economic conditions influence price movements.

## How the FHFA Measures Home Prices

The FHFA House Price Index tracks changes in single-family home values using a weighted repeat-sales methodology. The approach measures price movements for properties that have sold more than once, helping the agency assess how home values change over time.

The flagship index uses seasonally adjusted, purchase-only mortgage data from Fannie Mae and Freddie Mac. The agency also publishes alternative indexes that incorporate refinancing transactions, mortgages insured by the Federal Housing Administration and property records.

The latest figures provide an overview of home price trends but do not eliminate the broader affordability challenges facing buyers. With mortgage rates remaining elevated, the cost of financing a purchase continues to shape housing demand even as property values record modest annual gains.