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 October 2014 showed that August housing prices increased 0.5% as compared to July and 4.8% on a year-over-year basis (so as compared to August 2013). FHFA House Price Index figures for August came in slightly above analyst expectations and increased relative to the July figures on both a month-over-month and year-over-year basis. The S&P / Case-Shiller Home Price Index for October 2014 showed that housing prices declined 0.1% in August as compared to July but increased 5.6% on a year-over-year basis, although this increase was less than the 6.7% year-over-year increase reported for July 2014. The S&P / Case-Shiller Home Price Index came in below expectations and declined relative to the July figures. Although the indices showed slightly different results, both figures show that nationwide housing prices continue to stabilize. 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. After months of significant home price appreciation in 2012 and 2013, the trends reflected by the indices suggest that housing price appreciation is leveling off. (Source: Bloomberg)
What it Means for Mortgage Borrowers
A consistent leveling of home prices should draw more home buyers into the market. Significant home price appreciation has been one of the biggest factors keeping buyers on the sidelines so cooling housing prices could be a significant positive for the mortgage and real estate markets. Stabilizing housing prices combined with lower interest rates create favorable conditions for prospective home buyers. If you are thinking about buying a home, use the FREEandCLEAR Mortgage Qualification Calculator to determine what size mortgage you can afford and review the COMPARE LENDERS function on FREEandCLEAR to compare interest rates for lenders in your city.
The FREEandCLEAR Mortgage Expert