The FHFA house price index for August is up 0.3% on a seasonally adjusted basis after an upward revision to up 0.2% in July. The August index is above the consensus of up 0.1 percent in the Econoday survey of forecasters. The index is up 4.2 percent compared to August 2024, the slowest rise since up 3.2 percent in June 2023.

While home values for resales and refinancing continue to rise, the pace of increases has moderated with more supply on the market which gives homebuyers more negotiating power. Competition from new home construction is also improving homebuyers' ability to give more time to considering whether to buy or not.

The unadjusted FHFA house price index for August is down 0.4 percent in August from July and down 0.2 percent in July from June. Unadjusted prices are down for a second month in a row and probably reflect the trend for existing home prices which is to rise over the first half of the year and decline in the second half. The unadjusted year-over-year increase is 4.2 percent in August, the slowest since 3.4 percent in June 2023.

Expectations call for a muted 0.1 percent rise on the month.

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.