Strong Y/Y Home Price Gains for Arizona Metros

August 29, 2017
Valorie Hanni Rice Senior Specialist, Business Information

House prices continued to increase in nearly all states according to the Federal Housing Finance Agency second quarter 2017 House Price Index (HPI). House prices appreciated 8.4% over the year in Arizona on a seasonally adjusted basis for the second quarter 2017, a bit above the U.S. at 6.6%. Prices in Washington rose the highest at 12.4%, while both Alaska and West Virginia had decreased home prices. The release provides home price data for metropolitan areas using the All-transactions HPI, which includes both purchase and refinance mortgages. The one-year change in home prices for Arizona metros for the second quarter was: 8.0% in Flagstaff, 7.1% in Lake Havasu City-Kingman, 9.1% in Phoenix-Mesa-Scottsdale, 9.3% in Prescott, -0.9% in Sierra Vista-Douglas, 7.6% in Tucson, and 6.0% in Yuma. 

Arizona job growth of 1.7% over the year in July was higher than the U.S. figure of 1.5%. The Arizona unemployment rate was stable at 5.1% for the third month in a row according to the Arizona Office of Economic Opportunity report released on August 17. Leisure and hospitality was once again the sector with the most year over year growth, followed by education and health services. Natural resources & mining, information and other services all lost jobs. Over the year employment changes in Arizona metro areas for July were: Flagstaff 1.7%, Lake Havasu City-Kingman 1.5%, Phoenix 2.2%, Prescott 0.8%, Sierra Vista -2.4%, Tucson 0.6%, and Yuma 3.9%.  

The Consumer Price Index rose 0.1% in July on a seasonally adjusted basis, after having no change in June. The Bureau of Labor Statistics August 11 release indicated that the index for all items less food and energy rose 0.1% for the fourth month in a row. Prices for medical care, food and shelter all rose while energy prices declined. The annual inflation rate was 1.7% in July.

Producer prices decreased in July by 0.1%, seasonally adjusted. The drop in producer prices was mostly attributable to the decline of 0.2% in final demand services. Final demand goods were also lower by 0.1% for the month. Over the year, the final demand index rose 1.9% on an unadjusted basis in July according to the August 10 Bureau of Labor Statistics release. 

Housing affordability was a bit lower in the second quarter not only for the U.S. but most Arizona metropolitan areas as well, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. The August 10 release indicated that rising house prices was a factor in lowering affordability. Sierra Vista-Douglas, at 83.8%, had the highest share of homes in Arizona were the median sales price of homes was affordable to families earning the median income for that area (down from 86.6% in the first quarter). Yuma at 76.1% was second highest followed by Tucson at 72.3%, Lake Havasu City-Kingman at 67.5%, Phoenix at 66.0%, Flagstaff at 53.8% and Prescott at 51.3%. Prescott was the only Arizona metro area to post a higher share for the second quarter, moving up from 49.2% in the first quarter, but was still the least affordable in the state. Nationally, 59.4% new and existing homes sold in the second quarter were affordable for median-income earners - only Flagstaff and Prescott were less affordable than the nation.