| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.1% | 0.0% to 0.2% | 0.1% | 0.3% | 0.4% |
| Year over Year | 6.6% | 6.6% | 6.7% |
Highlights
The FHFA house price index for December rose 0.1 percent in December for the lowest increase since no change in January 2023. The change matches the consensus in the Econoday survey of forecasters.
While the monthly upward momentum in prices for home resales and refinancing in December was significantly softer than it had been in nearly a year, the year-over-year increase of 6.6 percent was only a tenth below the 6.7 percent in November which was the highest since 6.8 percent in December 2022.
Valuations of existing homes remain firm due to a lack of inventory in this sector of the housing market despite mortgage rates being at levels not seen in over 20 years.
While the monthly upward momentum in prices for home resales and refinancing in December was significantly softer than it had been in nearly a year, the year-over-year increase of 6.6 percent was only a tenth below the 6.7 percent in November which was the highest since 6.8 percent in December 2022.
Valuations of existing homes remain firm due to a lack of inventory in this sector of the housing market despite mortgage rates being at levels not seen in over 20 years.
Market Consensus Before Announcement
The house price index is expected to edge 0.1 percent higher in December following an as-expected 0.3 percent increase in November.
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.
