The House Price Index, or HPI in English, is an indicator that measures changes in single-family home prices throughout the United States or within a specific region. The home price index is produced and published by the Federal Housing Finance Agency (FHFA). Data statistics began in the 1970s, covering all 50 states and more than 400 cities in the United States. The data mainly comes from Fannie Mae and Freddie Mac, including mortgage loan data for home purchases, securitized loan data, etc., but only for housing mortgage loans that meet the amount limit, excluding jumbo mortgage loans. The U.S. Federal Housing Finance Agency uses a weighted calculation method to calculate the housing price index. People can check the monthly or quarterly housing price index report for free through the FHFA official website to understand the fluctuations in housing prices. Researchers in the real estate industry or related industries will use the housing price index to understand the current national housing affordability, down payment ratio, mortgage loan ratio and default risk. Government agencies or the Federal Reserve will use the housing price index to help analyze the inflation rate, because the housing price index will directly affect the consumer price index CPI, and CPI can indicate inflation. Investors will learn about the U.S. economic status through the housing price index, and use the housing price index to assist in investment strategies involving the real estate industry. Therefore, in response to the decline in the housing price index, the Federal Reserve may cut interest rates and other methods to stimulate consumption, increase consumer confidence, increase the housing price index, and help the economy return to a suitable development rhythm. If the housing price index grows too fast, interest rates will be raised to control the growth rate and avoid severe inflation. 2. For the real estate industry and related industries As a measure of housing price changes, the housing price index is an important business reference indicator for the real estate industry and the banking industry. Through the housing price index, the real estate development industry can track market trends to understand its own profitability, etc. The banking industry can use the housing price index to understand the default rate and early repayment rate of mortgage loans during the home purchase process. Changes in these values will directly affect the bank's risk level and profitability. 3. For investors Through the housing price index, investors can analyze market trends from the perspective of real estate and the overall economy. When the housing price index rises, first of all, the performance of stocks and funds related to the real estate industry, such as real estate developers, building materials dealers, etc., will usually rise simultaneously. On the contrary, when the home price index decreases, the performance of these industries may slump simultaneously. For the overall economy, an increase in the housing price index usually means an increase in consumer confidence and spending power, so the overall market will become more dynamic, and transaction volume and transaction value will show an upward trend. However, if the housing price index rises too fast, the market will stabilize as the Federal Reserve releases corresponding regulatory policies, and investors need to pay attention in a timely manner. How is the housing price index compiled? The Home Price Index uses a weighted calculation that measures changes in the price of eligible dwellings as a percentage change from a specific start date, where the Home Price Index is 100. There are three main calculation methods: Hedonic Regression (HR), Simple Moving Average (SMA), and Repeat-Sales Regression (RSR). The home prices included in the calculation are mortgages that meet Fannie Mae or Freddie Mac underwriting guidelines and do not exceed the conforming loan limit. This number is related to the index published by the Federal Housing Finance Agency, so the calculation of the home price index does not take into account jumbo mortgages.
At the same time, the house price index is also a repeat sales index, that is, the house price index will consider the average price change of repeatedly sold residences. For example, if a consumer purchased a unit for $300,000 in 2015, and in 2019, a new buyer purchased the property again with a mortgage loan for $325,000, the house price index will include this increase in the calculation of the overall house price index. The calculation uses data from mortgages purchased by households or securitized mortgages through Fannie Mae or Freddie Mac. What are the similarities and differences between HPI and S&P/Case-Shiller U.S. National Home Price Index? Another alternative measure of housing price fluctuations to the home price index mentioned above is the S&P/Case-Shiller U.S. National Home Price Index. This Case-Shiller home price index uses a weighted calculation method that is adjusted based on the quality of the homes sold. The Case-Shiller indicator is released once a month and is a lagging indicator. Its indication results are usually the market conditions two months ago. The similarities and differences between it and the housing price index are: Exponential type house price index Case-Shiller exponential meaning Track the rise and fall of U.S. unit housing prices through repeated valuation methods Release frequency once a month Producers and data sources Federal Housing Finance Agency FHFA Data source Fannie Mae and Freddie Mac Counted and produced by the County Assessor and Recorder's Office usage data Including mortgages, financing appraised values, etc. Home purchase price Calculation method Equally weighted calculations using Hedonic Regression (HR), Simple Moving Average (SMA), and Repeat-Sales Regression (RSR) Adjusted value-weighted calculation proposed by Karl Case, Robert Shiller, and Allan Weiss Computing features Mainly based on price adjustment Will be adjusted according to the quality of the house Index coverage All 50 states Home price data from 37 U.S. states How to check the house price index? To view the housing price index, you can log on to the official website of the Federal Housing Finance Agency. Because FHFA is the only agency in the United States that produces and publishes the housing price index, you can view the housing price index report it publishes on its main website. Step 1: Log in to the FHFA official website: https://www.fhfa.gov/ and click the “Data & Tools” button in the menu bar at the top of the page. Step 2: In the data page, click the "Downloadable Data" button to enter the downloadable data page. Step 3: Click "FHFA House Price Index" on the left side of the page Step 4: On the house price index page, click "Latest FHFA House Price Index news release and report" on the upper side to view the latest house price index report Step 5: At the bottom of the page, you can find the link to download the latest housing price index report. Users can download the data table as needed. Encyclopedia of American Brokerages U.S. Brokerage Ranking and Comparison [2024] Recommended Top 12 U.S. Brokerages More macroeconomic data What is the Federal Reserve Balance Sheet? Explore the Fed’s 24 primary dealers What is the National Financial Conditions Index? Published by the Chicago Fed What is the Buffett indicator? Buffet Indicator What is the U.S. Treasury Volatility Index? Move Index What dollar index? US Dollar Index
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