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US: FHFA House Price Index
| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 0.3% | 0.2% to 1.0% | 0.1% | 0.6% | 0.7% |
| Year over Year | 1.8% | 1.9% | 2.1% |
Highlights
The seasonally adjusted FHFA house price index for December is up 0.1 percent compared to November after rising 0.7 percent in November from October. The Econoday survey of forecasters looks for an increase of 0.3 percent in December. The year-over-year increase in the index for December is 1.8 percent after 2.1 percent in November and 1.8 percent in October. Moderation in prices for home resales and refinancing in December indicate that the uptick in activity in November was short-lived. Homebuyers took advantage of some increase in supply at a time when mortgage rates were declining which translated into a more competitive market. Home refinancing was active as mortgage holders took out new loans to reduce monthly payments.
The Freddie Mac monthly average rate for a 30-year fixed rate mortgage declines to 6.19 percent in December from 6.24 percent in November and 6.25 percent in October. Further declines into January and February have the effect of pushing home prices higher as more consumers are motivated to enter the housing market by lower rates or refinancing existing notes.
The unadjusted FHFA house price index is down 0.5 percent in December from November after an increase of 0.1 percent in November from October and a decrease of 0.1 percent in October from September. The unadjusted index is up 1.8 percent in December from a year earlier.
Market Consensus Before Announcement
A moderate 0.3 percent increase on the month is expected.
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.
