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US: FHFA House Price Index
| Actual | Previous | Revised | |
| Month over Month | 0.0% | 0.1% | -0.2% |
| Year over Year | 1.7% | 1.6% | 1.8% |
Highlights
The adjusted FHFA house price index for February is unchanged from January after a small upward revision to up 0.2 percent in January from December. The index is up 1.7 percent in February from a year earlier and continues the downward trend for a third month in a row. The year-over-year change is the slowest since up 1.7 percent in March 2012. Increased supply in the housing market and sluggish sales mean that upward pressure on prices is easing. Valuations for mortgages for existing home purchases and home refinancing reflect a generally soft housing market going into the traditional spring buying season.
The unadjusted house price index for February is up 0.9 percent from January after dipping 0.1 percent in January from December. The year-over-year index increase is 1.8 percent in February and January. Buyer sensitivity to changes in mortgage rates can lead to some month-to-month volatility with sporadic upticks in demand.
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.
