The March FHFA house price index is down 0.1 percent month-over-month on a seasonally adjusted basis after no change in February. The index is up 3.7 percent compared to March 2024, the slowest annual increase since up 3.1 percent in June 2023. Underlying upward pressure on home prices continues to moderate. However, current mortgage rates remain within reach of the 7 percent-mark for 30-year fixed rate mortgages and continue to have an adverse impact on home affordability.

The unadjusted FHFA house price index is up 0.8 percent month-over-month in March after rising 0.9 percent in February. Home prices typically rise in the first months of the year as sellers start listing units in anticipation of the spring buying season. The index is up 3.8 percent compared to March 2024, a tick lower than up 3.9 percent in February. The March year-over-year gain is the lowest since up 3.3 percent in June 2023.

Although this index lags other data about home prices, it suggests that the cooling in the housing market is going to bring rising home prices more in line with demand.

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.