| Actual | Previous | Revised | |
|---|---|---|---|
| Month over Month | 0.3% | 0.4% | 0.5% |
| Year over Year | 4.2% | 4.5% |
Highlights
The seasonally adjusted FHFA house price index is up 0.3 percent month-over-month in November after a small upward revision to up 0.5 percent in October. The index is up 4.2 percent compared to November 2023.
The unadjusted FHFA house price index is down 0.4 percent in November from the prior month and down 0.1 percent in October from September. The unadjusted index is also up 4.2 percent year-over-year in November.
Month-to-month fluctuations in home valuations for purchasing an existing unit or refinancing a current mortgage probably reflect some outside factors like more supply coming on to the market at a time of year when sellers are normally less active, but also regional impacts where demand for homes is higher in storm-affected areas. The underlying trend, however, is for further moderation in rising home prices. The November year-over-year increase is the lowest since up 3.2 percent in June 2023 for the seasonally adjusted index and up 3.3 percent for the unadjusted index.
Home prices are feeling the pinch of an increase in mortgage interest rates in November that isn't likely to lose its grip into December and January. Sellers will be competing for buyers at a time when home affordability is less favorable due to financing costs. The Freddie Mac rate for a 30-year fixed rate mortgage had a monthly average of about 6.5 percent in October that rose to around 6.8 percent in November, remained near there in December and has neared 7.0 percent in January.
The unadjusted FHFA house price index is down 0.4 percent in November from the prior month and down 0.1 percent in October from September. The unadjusted index is also up 4.2 percent year-over-year in November.
Month-to-month fluctuations in home valuations for purchasing an existing unit or refinancing a current mortgage probably reflect some outside factors like more supply coming on to the market at a time of year when sellers are normally less active, but also regional impacts where demand for homes is higher in storm-affected areas. The underlying trend, however, is for further moderation in rising home prices. The November year-over-year increase is the lowest since up 3.2 percent in June 2023 for the seasonally adjusted index and up 3.3 percent for the unadjusted index.
Home prices are feeling the pinch of an increase in mortgage interest rates in November that isn't likely to lose its grip into December and January. Sellers will be competing for buyers at a time when home affordability is less favorable due to financing costs. The Freddie Mac rate for a 30-year fixed rate mortgage had a monthly average of about 6.5 percent in October that rose to around 6.8 percent in November, remained near there in December and has neared 7.0 percent in January.
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.
