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. For example, the report released in September contains information on housing prices in the month of July.
In welcome news for prospective home buyers, the FHFA House Price Index for September 2014 showed that July housing prices increased only 0.1% as compared to June and 4.4% on a year-over-year basis (so as compared to July 2013). FHFA House Price Index figures for July came in below analyst expectations and declined relative to the June figures on both a month-over-month and year-over-year basis. The S&P / Case-Shiller Home Price Index for September 2014 showed that housing prices declined 0.5% in July as compared to June but increased 6.7% on a year-over-year basis, although this increase was less than the 8.1% year-over-year increase reported for June 2014. Similar to the FHFA House Price Index figures, the S&P / Case-Shiller Home Price Index came in below expectations and declined relative to the June figures. The most recent FHFA and S&P / Case-Shiller home price indices show that nationwide housing prices continue to flatten. 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. In general, however, all signals point to a cooling off of housing prices after years of significant price increases. (Source: Bloomberg)
What it Means for Mortgage Borrowers
Home buyers who had been deterred by a lack of affordable housing inventory could potentially enter the real estate market as prices stabilize. First-time home buyers have been particularly reluctant to enter the market so flattening prices combined with relatively low interest rates could bring a new wave of buyers into the marketplace. It is important to emphasize that each city has a unique housing price dynamic and prices in certain markets continue to rise, but the but on a national basis, housing prices are gradually becoming more affordable for more people. Check out the COMPARE LENDERS function on FREEandCLEAR to review interest rates for lenders in your city and use our First-Time Home Buyer Mortgage Cheat Sheet as your starting point for the mortgage process.
The FREEandCLEAR Mortgage Expert