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 May 2015 showed that March housing prices increased 0.3% as compared to February and increased 5.2% on a year-over-year basis (so as compared to March 2014). The month-over-month FHFA House Price Index figure came in below the range of analyst estimates and declined relative to results for February 2015 which showed a 0.7% increase on a monthly basis and a 5.4% increase on a year-over-year basis. The March FHFA House Price Index figures shows that home prices continue to go up albeit at a slower pace, which good but not great news for both home buyers and sellers. The S&P / Case-Shiller Home Price Index for May 2015 showed stronger month-over-month results with housing prices increasing 1.0% in March, as compared to February. On a year-over-year basis, the S&P / Case-Shiller Home Price Index increased 5.0% in March 2015, the same increase reported for February 2015. The S&P / Case-Shiller Home Price Index March figures fell within the top half of the range of analyst expectations. Both the FHFA House Price and S&P / Case-Shiller Home Price indices indicate that home prices continue to climb although at different rates. (Source: Bloomberg)
What it Means for Mortgage Borrowers
Moderate increases in home prices are generally positive because they reflect increased buyer demand and bring additional inventory onto the housing market. A significant and sudden increase in prices, however, can push many prospective home buyers out of the market. The May FHFA House Price Index and S&P / Case-Shiller Home Price Index reports show relatively steady price appreciation which is a positive for the overall housing and mortgage markets. It will be interesting to see what the June report figures show for April, which is when the Spring home buying season starts in full force. Additionally, it is important to highlight that both indices reflect nationwide trends and home prices vary widely by market. Overall, however, the national housing market appears to be gaining momentum. If you are considering buying a home in the next six-to-twelve months, use our Mortgage Qualification Calculator to determine what size mortgage you can afford. You can also use our INTEREST RATES feature to compare lenders in your area to find the mortgage with the lowest rate and closing costs.
The FREEandCLEAR Mortgage Expert