Definition
The OFHEO Price Index, officially known after September 2008 as the FHFA House Price Index (HPI), is a measure of the movement of single-family house prices in the United States. The index is based on data collected from conforming, conventional mortgages purchased or securitized by the government-sponsored enterprises (GSEs), namely Fannie Mae and Freddie Mac. The index is available for individual U.S. states and metropolitan areas, and it is used to gauge house price trends at various geographic scales.
Examples
Monthly House Price Index Report:
- In a typical report, the FHFA House Price Index might show a 1.2% increase in house prices for the previous quarter on a national level. However, house prices in the Pacific region might have increased by 1.8%, while the East South Central states saw a still robust but lower 0.9% rise.
Regional Comparison:
- Assume a real estate investor wants to compare house price trends between different metropolitan areas. They can use the FHFA House Price Index to analyze how prices have changed in areas like New York, Chicago, and Los Angeles over the past years, assisting in their investment decision-making.
Frequently Asked Questions (FAQs)
What is the main purpose of the FHFA House Price Index?
The main purpose is to measure changes in single-family home prices across the United States to help monitor housing trends over time.
How is the FHFA House Price Index calculated?
The index is calculated using data from conforming, conventional mortgages that are purchased or securitized by Fannie Mae and Freddie Mac.
Are all home sales included in the FHFA House Price Index?
No, the index only includes data from conforming mortgages handled by the GSEs, which means it excludes jumbo loans and FHA/VA loans, among others.
How frequently is the FHFA House Price Index updated?
The index is updated on a monthly basis with revisions made periodically as more comprehensive data becomes available.
Why was the index name changed from OFHEO Price Index to FHFA House Price Index?
The name was changed following the establishment of the Federal Housing Finance Agency (FHFA) in September 2008, which assumed regulatory responsibilities from the Office of Federal Housing Enterprise Oversight (OFHEO).
Related Terms
House Price Index (HPI): A measure of the price changes of residential properties over time.
Government-Sponsored Enterprises (GSEs): Financial services corporations created by Congress to enhance the flow of credit to specific sectors of the economy, like housing (e.g., Fannie Mae, Freddie Mac).
Conforming Loan: A mortgage eligible to be purchased by Fannie Mae or Freddie Mac, meeting specific guidelines set by these entities.
Real Estate Market: The economy segment dealing in the buying and selling of property, including residential homes.
Online References
- Federal Housing Finance Agency (FHFA) - House Price Index
- Investopedia - House Price Index
- Wikipedia - House Price Index (HPI)
Suggested Books for Further Studies
- “Housing Policy in the United States” by Alex F. Schwartz
- “Real Estate Market Analysis: Methods and Case Studies, Second Edition” by Stephen F. Fanning
- “Investing in Real Estate, 7th Edition” by Gary W. Eldred
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