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 June reports for the FHFA House Price Index and S&P / Case-Shiller Home Price Index showed that home price appreciation slowed in April. Before drawing too strong of a conclusion from the reports, it is important to reiterate that although both reports are released in June, they contain data for the month that is two months prior to the release date, so April in this case. Numerous housing market indicators with more recent data, including the June new and existing home sales reports showed much stronger trends. That said, the FHFA House Price and S&P / Case-Shiller Home Price indices offer interesting insights into home price performance. The FHFA House Price Index for June 2015 showed that April housing prices increased 0.3% as compared to March and increased 5.3% on a year-over-year basis (so as compared to April 2014). The FHFA House Price Index figures came in at the low end the range of analyst estimates and were relatively flat compared to March 2015, which also showed a 0.3% monthly increase and a 5.3% year-over-year increase. The S&P / Case-Shiller Home Price Index for June 2015 showed very similar results. The S&P / Case-Shiller Home Price Index showed that April housing prices increased 0.3% as compared to March and increased 4.9% on a year-over-year basis. The monthly increase came in below analyst expectations and the year-over-year change came in at the bottom of analyst expectations. Of note in the S&P / Case-Shiller Home Price Index report is that eight of 20 cities included in the index showed price declines while several cities, such as San Francisco, posted double-digit price gains. Although both reports showed moderate home price growth for April, market dynamics clearly vary by city. (Source: Bloomberg)
What it Means for Mortgage Borrowers
Because of the two month lag in data and recent reports that show a robust real estate market in May, the FHFA House Price Index and S&P / Case-Shiller Home Price Index reports should be discounted somewhat by borrowers. Despite an increase in interest rates over the past several months, the real estate and mortgage markets are showing significant momentum as we head into the Summer months. In fact, rising interest rates coupled with higher rents may be pushing more home buyers into the marketplace. Prospective buyers should use our Mortgage Selector Calculator to determine what size mortgage you can afford and the mortgage program that is right for you. Additionally, borrowers should use the INTEREST RATES feature on FREEandCLEAR to select the lender offering the lowest mortgage rate and fees in their area.
The FREEandCLEAR Mortgage Expert