The FHFA House Price Index (HPI) is a comprehensive measure of the movement of single-family house prices in the United States. Compiled by the Federal Housing Finance Agency (FHFA), this index is based on data collected from loans held by government-sponsored enterprises (GSEs), and values are available for each state and metropolitan area.
The FHFA House Price Index (HPI) is a critical measure of the average price changes of single-family houses across the United States. This index, compiled by the Federal Housing Finance Agency (FHFA), is based on data derived from mortgage loans held or guaranteed by Government-Sponsored Enterprises (GSEs) such as Fannie Mae and Freddie Mac. The HPI provides vital insights into housing market trends on a national, state, and metropolitan area level.
The FHFA HPI predominantly uses data from:
Mortgage loans purchased or securitized by Fannie Mae and Freddie Mac.
Repeat-sales method measuring changes in the price of the same property over time.
Pertinent property attributes and transaction dates from public records.
The HPI calculation uses the following repeat-sales regression technique:
Where:
\( P_t \) = House price at time t
\( \beta_0, \beta_1, \beta_2 \) = Coefficients
\( Month_i \) = Monthly indicator variable
\( Property_j \) = Property-specific variable
\( \epsilon_t \) = Error term
Includes only house price data for single-family properties that have been sold.
Incorporates purchase prices as well as appraisal values from refinancing.
Economic Analysis: Used by economists to track housing market health and identify trends over time.
Policy Making: Helps in formulating housing policies and regulatory measures.
Financial Markets: Aids investors by providing insights into real estate market performance.
Real Estate Valuation: Serves as a benchmarking tool for appraisers and valuation experts.
Coverage: The FHFA HPI includes data from all states and metropolitan areas, while the Case-Shiller covers select metropolitan areas.
Data Source: FHFA uses data from GSE mortgages; Case-Shiller includes a broader range of home sales.
Calculation Methodology: Both use repeat-sales regression techniques but apply different methodologies.
Government-Sponsored Enterprise (GSE): Entities like Fannie Mae and Freddie Mac that facilitate secondary mortgage markets.
Repeat-Sales Index: An index based on the price changes of the same property over multiple transactions.
Refinancing: The process of revising a loan agreement to accommodate the borrower’s present financial status.
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