| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -0.1% | -0.2% to 0.2% | 0.1% | -0.1% | 0.0% |
| Year over Year | 4.5% | 5.1% | 5.3% |
Highlights
The FHFA house price index for July is up 0.1 percent on a seasonally adjusted basis after a small upward revision to unchanged in June. The July reading is above the consensus of down 0.1 percent in the Econoday survey of forecasters. The data on home prices for sales of existing units and refinancings have been little changed month-over-month since March. The index for July is up 4.5 percent compared to a year earlier, a sharp deceleration from up 5.3 percent in June and the lowest year-over-year increase since 3.2 percent in June 2023.
On an unadjusted basis, the price index is down 0.3 percent in July after rising 0.1 percent in June. Year-over-year the index is up 4.6 percent, its lowest increase since up 3.4 percent in June 2023.
In July, rising mortgage rates and hopes for lower rates in the near future kept homebuyers out of the market. With a larger supply of homes available for sale, price increases were kept in check in a buyers' market.
On an unadjusted basis, the price index is down 0.3 percent in July after rising 0.1 percent in June. Year-over-year the index is up 4.6 percent, its lowest increase since up 3.4 percent in June 2023.
In July, rising mortgage rates and hopes for lower rates in the near future kept homebuyers out of the market. With a larger supply of homes available for sale, price increases were kept in check in a buyers' market.
Market Consensus Before Announcement
The house price index is expected to edge down 0.1 percent on the month in July following the 0.1 percent contraction in June. Month-to-month readings in this report are tied to changes in mortgage rates which can be volatile.
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.
