Northwest Indiana homeowners are seeing one of the biggest surges of home values in the country.

The Gary metropolitan area, which encompasses Lake, Porter, Jasper and Newton Counties, ranked ninth out of 100 metros nationwide in house price appreciation, according to the Federal Housing Finance Authority. The federal agency's quarterly House Price Index found home prices have risen 7.5% in Northwest Indiana over the past year.

Indiana is 16th nationwide with a 5.8% increase in home prices during that period.

“House prices in the second quarter increased by 5% compared to a year earlier, contributing another quarter of growth to an eight-year run. Prices increased in all states and among the top 100 metro areas," FHFA Senior Advisor for Economics Lynn Fisher said. "The pace of home price increase, however, has continued its deceleration for the fifth consecutive quarter. The pace of home sales has also slowed over the last two years in response to market conditions, including affordability constraints and tight inventories. As of July, inventories of homes for sale are currently below both 2017 and 2018 levels."

Overall U.S. home prices rose 1% in the second quarter and are up 5% year-over-year, according to the Federal Housing Finance Authority. Nationwide, the Gary metro that covers most of Northwest Indiana trailed only Boise City, Idaho; Grand Rapids, Michigan; San Antonio, Texas; Austin, Texas; Colorado Springs, Colorado; Akron, Ohio; Jacksonville, Florida; and Knoxville, Tennessee. El Paso, Texas rounded out the top 10.

“House prices rose again in all states and the top 100 metro areas, but the pace of growth has slackened,” FHFA Supervisory Economist William Doerner said. “The majority of states and cities are experiencing slower house price gains than they did a year ago, even with constrained housing supply and extremely attractive mortgage rates.”

Housing prices in Northwest Indiana have risen by the 45th fastest rate out of 100 metros across the United States since the peak of home values in the first quarter of 2007.

Nationwide, house prices have risen for 32 consecutive quarters. Given the low interest rate environment, home values are projected to continue to appreciate in the third quarter.

"We expect some positive effect of the mortgage interest rate decline on housing demand as well as home price appreciation given that rates have fallen a full percentage point since the end of 2018 to below 4% in August," Fisher said. "This should lead to a longer summer buying season and potentially a higher rate of appreciation on a seasonally adjusted basis than would have previously been expected in the third quarter."
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