| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.3% | 0.2% to 0.3% | 0.6% | 0.5% | 0.7% |
| Year over Year | 3.6% | 4.0% | 4.3% |
Highlights
The FHFA house price index is up 0.6 percent in March from February and revised higher to up 0.7 percent in February from January. The rise is above the consensus for up 0.3 percent in the Econoday survey of forecasters. The March and February gains are the strongest since up 1.2 percent in May 2022. The March index is up 3.6 percent year-over-year, the slowest rise since 3.0 percent in July 2012. Valuations for purchases of existing homes and home refinancing have regained some upward momentum along with a more active housing market. Some of this is due to thin inventories of homes for sale at a time when mortgage rates dipped enough to bring buyers and refinancers back into the market.
The annual pace of price increases has slowed significantly but is likely nearing a bottom. The housing market overall is down compared to the last couple of years, but is showing some underlying demand as households consider their shelter needs and the cost of renting versus buying.
The annual pace of price increases has slowed significantly but is likely nearing a bottom. The housing market overall is down compared to the last couple of years, but is showing some underlying demand as households consider their shelter needs and the cost of renting versus buying.
Market Consensus Before Announcement
The house price index had been flat before rising a surprising 0.5 percent in February. March's consensus is a monthly rise of 0.3 percent.
Definition
The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing, using data provided by Fannie Mae and Freddie Mac. The House Price Index is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. In contrast to other house price indexes, the sample is limited by the ceiling amount for conforming loans purchased by these government-sponsored enterprises (GSE). Mortgages insured by the FHA, VA, or other federal entities are excluded because they are not"conventional" loans. The FHFA House Price Index is a repeat transactions measure. It compares prices or appraised values for similar houses.
Description
Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can dampen housing starts. Changes in home values, and the ability to draw upon expanding lines of home equity loans, play key roles in consumer spending and in consumer financial health.
Beginning with the onset of the subprime credit crunch in mid-2007 and with it a downturn in home prices, the ability of borrowers to refinance their debt into affordable fixed rate mortgages was sharply constrained. This in turn limited aggregate consumer spending and contributed to the depth of the Great Recession. From its peak in 2007 to its nadir in 2011, FHFA's house price index fell nearly 30 percent. The subsequent recovery proved slow but steady with the index finally surpassing its prior highs in 2016.
Beginning with the onset of the subprime credit crunch in mid-2007 and with it a downturn in home prices, the ability of borrowers to refinance their debt into affordable fixed rate mortgages was sharply constrained. This in turn limited aggregate consumer spending and contributed to the depth of the Great Recession. From its peak in 2007 to its nadir in 2011, FHFA's house price index fell nearly 30 percent. The subsequent recovery proved slow but steady with the index finally surpassing its prior highs in 2016.
