The seasonally adjusted FHFA house price index for February is up 0.1 percent month-over-month after an increase of 0.3 percent in January. The index is up 3.9 percent compared to a year ago. The February rise matches the consensus in the Econoday survey of forecasters. The year-over-year increase is the smallest since up 3.2 percent in June 2023. While home prices continue to rise modestly, the heated competition during a period of lean inventories for existing units that drove up prices in the last couple of years is abating. This improves the prospect of better home affordability in terms of price. However, rising mortgage rates will cut into affordability.

The unadjusted house price index for February is up 1.0 percent after edging up 0.1 percent in January. Valuations of existing homes for purchase or refinance tend to jump in the February-April period at the start of the spring after the less active winter months. The unadjusted index is also up 3.9 percent compared to February 2024 and the lowest since up 3.3 percent in June 2023.

Housing prices expected up a moderate 0.3 percent 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.