This year, Utah has had one of the hottest housing markets in the country. That’s according to an Aug. 31 report that said Utah had the second-fastest home price growth among states.
With home prices increasing 28.3% between the second quarters of 2020 and 2021, Utah was second only to Idaho where prices went up 37.1%.
Nationally, U.S. house prices rose 17.4% during the same period.
The Federal Housing Finance Agency’s House Price Index tracks changes in single-family house values based on repeat purchases of homes.
“The second quarter took over the record for the largest annual gain in the history of our house price index,” said Dr. Lynn Fisher, deputy director of FHFA’s Division of Research and Statistics, in a video about the report. “House prices rose 17.4% from the year prior. This surpasses the prior quarter’s gains of 12.9%, which was the previous record.”
Best and Worst States
Also in the top five states were No. 3 Arizona (up 23.9%), No. 4 Montana (up 23.7%) and No. 5 Rhode Island (up 23.7%). The Mountain states — Utah, Idaho, Montana, Nevada, Wyoming, Colorado, Arizona and New Mexico — had the highest gains although prices rose in all 50 states.
“The Mountain Division once again had the strongest annual growth among all Census divisions, posting a 22.9% year-over-year house price gain,” Fisher said. “The region has led in annual appreciation for 15 consecutive quarters as in-migration from the West Coast has continued.”
States with the lowest home price appreciation were Alaska (8.2%), North Dakota (8.7%), Louisiana (9.6%), Mississippi (11.4%) and Iowa (11.5%).
Utah Metro Areas
In addition to Utah’s No. 2 ranking, Salt Lake City came in at No. 3 among metropolitan areas with 26.2% annual home price appreciation. Only Boise, Idaho, at 41.1% and Austin, Texas, at 35.2% had greater gains.
Salt Lake City is the only Utah metro area included on the purchase-only list.
A separate FHFA list, which uses data from all transactions, including appraisals, features all five of Utah’s metro areas. In fact, on a list of 238 U.S. metros, every Utah area ranked in the top 20.
- No 4. – St. George: 23.6%
- No. 6 – Ogden-Clearfield: 21.6%
- No. 9 – Provo-Orem: 21.3%
- No. 11 – Logan: 20.5%
- No. 13 – Salt Lake City: 19.7%
Past and Future Home Price Growth
While the gains of the last quarter were particularly exceptional, long-term trends show that Utah is no stranger to home price increases. In the past five years alone, prices of houses in the Beehive State have gone up nearly 81%. Since 1991, there’s been a 498% increase in home prices.
The U.S. trends are similar with long-term gains over time and skyrocketing prices in the past year.
“Why do we continue to see record-setting house price increases in the U.S.?” Fisher said. “Mortgage rates have remained at their lowest level since the 1970s. While new listings have recovered to match prior years’ levels, houses have not been staying on the market for long. The increased demand has kept the inventory of houses for sale very low, leading to intense competition and rapid price increases.”
However, those rapid increases should begin to moderate. Affordability challenges combined with more housing supply, will likely slow the rate of home price growth. This would be welcome relief for home buyers who have struggled to find a property.
“Recent purchase mortgage application activity, a leading indicator of home sales, suggests that the pace of sales nationwide will slow in the coming months relative to a year ago, which could mean that house price growth will moderate later in the year,” Fisher said.
To learn about the housing market conditions in your own neighborhood, contact a local Realtor. Find one at UtahRealtors.com.