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 March 2015 showed that January housing prices increased 0.3% as compared to December and increased 5.1% on a year-over-year basis (so as compared to January 2014). The FHFA House Price Index for January came in at the low end of the range of analyst estimates and softened relative results for December 2014 which showed a 0.7% increase on a monthly basis and a 5.4% increase on a year-over-year basis. The FHFA House Price Index shows that home prices are appreciating at a moderate pace which is relatively positive news for both home sellers and buyers. The S&P / Case-Shiller Home Price Index for March 2015 showed similar results with housing prices increasing 0.9% in January as compared to December and increasing 4.6% on a year-over-year basis, which represents a slight increase as compared to the 4.4% year-over-year growth reported in December. The S&P / Case-Shiller Home Price Index for January came in at the top end of the range of analyst projections and improved slightly relative results for December 2014. The positive performance for both the FHFA House Price and S&P / Case-Shiller Home Price indices to start 2015 continues the momentum seen at the end of 2014. Improving home prices may encourage more home owners to sell while the relatively gradual pace of home price appreciation is positive news for home buyers. (Source: Bloomberg)
What it Means for Mortgage Borrowers
Home prices continue to increase although not at a rate that should be alarming for home buyers. An uptick in home prices should bring more supply on the market which is good news for prospective home buyers who benefit from increased housing inventory. A more significant jump in home prices in the coming months, however, could have a negative effect on the mortgage and real estate markets. Both the FHFA House Price and S&P / Case-Shiller Home Price indices for January showed moderate-to-slowing price growth on a monthly and annual basis which bodes well for home price stability going forward. In another positive for home buyers, interest rates continue to be low, which helps to offset an increase in home prices for prospective buyers. Before you start the home search process, use the Mortgage Qualification Calculator on FREEandCLEAR to determine what price home you can afford and use our INTEREST RATES function to review mortgage rates and fees for lenders in your area.
The FREEandCLEAR Mortgage Expert