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Home Price Indices Indicate Cooling Market

Home Price Indices Indicate Cooling Market

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

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 November 2014 showed that September housing prices were flat as compared to August and increased 4.3% on a year-over-year basis (so as compared to September 2013).  The FHFA House Price Index for September came in below analyst projections for a 0.4% increase on a month-over-month basis and the annual change was less than the 4.7% annual increase in August.  The S&P / Case-Shiller Home Price Index for November 2014 showed that housing prices increased 0.3% in September as compared to August and increased 4.9% on a year-over-year basis, although this represented the smallest year-over-year increase in almost two years.  The S&P / Case-Shiller Home Price Index figures met analyst expectations with the monthly figure improving and the annual figure declining.  Although the indices showed mixed results, both figures show that nationwide housing prices continue to cool off.  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 latest reports for these indices reinforce the idea that housing prices are stabilizing. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The latest figures from the FHFA Housing Price Index and S&P / Case-Shiller Home Price Index suggest that the housing market is becoming more favorable for buyers.  Rising home prices makes home ownership less affordable, especially for first-time home buyers, so flattening prices is a welcome sign. Cooling housing prices are combining with lower interest rates to create more appealing real estate market conditions for home buyers as we head into 2015.  If you are thinking about buying a home, use the FREEandCLEAR Mortgage Selector to determine the mortgage size and program that are right for you and use the INTEREST RATES feature to compare interest rates for lenders in your city.

The FREEandCLEAR Mortgage Expert

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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