There are two primary measures of housing prices that we track at FREEandCLEAR: the Federal Housing Finance Agency (FHFA) House Price Index, which uses certain nationwide mortgage activity to track home prices and the S&P / Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan markets. Both indices are reported on a monthly basis and include information for the month that is two months prior to the reporting date.
The FHFA House Price Index for January 2015 showed that November housing prices increased 0.8% as compared to October and increased 5.3% on a year-over-year basis (so as compared to November 2013). The FHFA House Price Index for November came in above analyst projections for a 0.4% increase on a month-over-month basis and the annual change increased as compared to the 4.5% annual increase in October. The S&P / Case-Shiller Home Price Index for January 2015 showed that housing prices increased 0.7% in November as compared to October and increased 4.3% on a year-over-year basis, which represents a slight decline as compared to the 4.5% year-over-year growth reported in October. The S&P / Case-Shiller Home Price Index figures came in within analyst expectations with both the monthly and annual figures declining slightly as compared to October. The positive performance for both the FHFA House Price and S&P / Case-Shiller Home Price indices suggests that the housing market remains relatively steady although prices are increasing at a slower pace than in 2012 and 2013. It is important to highlight that these indices reflect the trend in nationwide housing prices and housing prices for a specific region or city can vary significantly. The S&P / Case-Shiller Home Price Index which tracks individual cities showed price notable appreciation in Atlanta, Tampa Bay and San Francisco. (Source: Bloomberg)
What it Means for Mortgage Borrowers
A significant increase in housing prices encourages homeowners to consider selling but makes buying a home less affordable for prospective buyers. The positive readings from the latest FHFA Housing Price Index and S&P / Case-Shiller Home Price Index show an underlying strength to the housing market although home price appreciation remains relatively constrained as compared to the past several years. The most recent new and existing home sales reports showed similar data, reporting a modest increase in home prices. A more significant increase in home prices could put a damper on the real estate and mortgage markets and FREEandCLEAR will continue to monitor the FHFA Housing Price Index and S&P / Case-Shiller Home Price indices to track changes in home prices. Continued low interest rates help to offset an increase in home prices and you can use the INTEREST RATES function on FREEandCLEAR to keep tabs on interest rates and fees for lenders near you. Additionally, if you are currently renting and thinking about buying a home, use our Rent Payment Mortgage Affordability Calculator to determine what size mortgage you can afford based on your monthly rent payment.
The FREEandCLEAR Mortgage Expert