The FHFA house price index edged 0.1 percent higher in March from February after an unrevised jump of 1.2 percent in February from January. March's increase is below Econoday's consensus for a 0.5 percent gain. February's swing higher was due to concerns about rising mortgage rates that increased competition for existing homes, and borrowed some activity from March as demand was depleted and/or some buyers found themselves priced out of the market.

The Freddie Mac rate for a 30-year fixed rate mortgage averaged 6.84 percent in January, rising to 6.81 percent in February and was little changed at 6.82 percent in March. Rates continued to rise to 7.04 percent in April and moderate only slightly to 7.02 percent in May. Mortgage rates at or near 7 percent seem to be a decision point for some potential homebuyers in terms of affordability. This will send some who have a more pressing reason to buy to adjustable rate mortgages.

FHFA's year-over-year rise in the house price index is 6.7 percent in March, slowing 7.1 percent in February which was the highest since 8.2 percent in November 2022. Despite softer overall sales of homes, lack of supply of the more sought-after units is keeping prices elevated.

The house price index is expected to rise 0.5 percent on the month in March following a surprisingly strong 1.2 percent increase in February.

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.

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.