OFHEO Price Index

OFHEO Price Index Housing Market Real Estate Mortgage GSEs FHFA
The OFHEO Price Index, also known as the FHFA House Price Index, is a home price index compiled by the Office of Federal Housing Finance Agency, based on data from loans held by government-sponsored enterprises (GSEs).
On this page

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

  1. 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.

  2. 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).

  • 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

  1. Federal Housing Finance Agency (FHFA) - House Price Index
  2. Investopedia - House Price Index
  3. Wikipedia - House Price Index (HPI)

Suggested Books for Further Studies

  1. “Housing Policy in the United States” by Alex F. Schwartz
  2. “Real Estate Market Analysis: Methods and Case Studies, Second Edition” by Stephen F. Fanning
  3. “Investing in Real Estate, 7th Edition” by Gary W. Eldred

Fundamentals of Real Estate: Real Estate Basics Quiz

### What does the FHFA House Price Index measure? - [x] Changes in single-family house prices across the United States - [ ] Adjusted interest rates for mortgages - [ ] Annual real estate taxes - [ ] Commercial property values > **Explanation:** The FHFA House Price Index measures the changes in single-family house prices across the United States, providing a comprehensive look at housing price trends. ### Which organization is responsible for the FHFA House Price Index? - [x] Federal Housing Finance Agency (FHFA) - [ ] Federal Reserve - [ ] Department of Housing and Urban Development (HUD) - [ ] Federal Deposit Insurance Corporation (FDIC) > **Explanation:** The Federal Housing Finance Agency (FHFA) is responsible for compiling and reporting the FHFA House Price Index. ### As of September 2008, what did the OFHEO Price Index get renamed to? - [ ] Case-Shiller Index - [x] FHFA House Price Index - [ ] Real Estate Price Index - [ ] National Housing Index > **Explanation:** Following the establishment of the Federal Housing Finance Agency (FHFA) in September 2008, the OFHEO Price Index was renamed the FHFA House Price Index. ### Which types of mortgages does the FHFA House Price Index primarily use for data? - [ ] Jumbo loans - [ ] FHA loans - [ ] VA loans - [x] Conforming, conventional mortgages > **Explanation:** The FHFA House Price Index uses data from conforming, conventional mortgages purchased or securitized by Fannie Mae and Freddie Mac. ### How often is the FHFA House Price Index updated? - [ ] Annually - [ ] Quarterly - [x] Monthly - [ ] Biannually > **Explanation:** The FHFA House Price Index is updated on a monthly basis. ### What is excluded from the data used in the FHFA House Price Index? - [x] Jumbo loans and FHA/VA loans - [ ] Single-family homes - [ ] Conventional mortgages - [ ] Appraisal values > **Explanation:** The FHFA House Price Index excludes jumbo loans and FHA/VA loans, focusing on conforming, conventional mortgages serviced by the GSEs. ### Which federal entities' data are used in the FHFA House Price Index? - [ ] FDIC and HUD - [ ] Federal Reserve and Treasury Department - [x] Fannie Mae and Freddie Mac - [ ] USDA and VA > **Explanation:** The data used in the FHFA House Price Index are from Fannie Mae and Freddie Mac. ### What geographical reports does the FHFA House Price Index provide? - [x] States and metropolitan areas - [ ] Countries - [ ] Continents - [ ] World's major cities > **Explanation:** The FHFA House Price Index provides data for individual U.S. states and metropolitan areas, allowing for detailed geographic analyses. ### Why is the FHFA House Price Index not fully representative of all U.S. housing markets? - [ ] It includes only commercial properties. - [ ] It is based only on certain time periods. - [x] It uses only data from conforming, conventional mortgages. - [ ] It covers only rental properties. > **Explanation:** The index is based only on conforming, conventional mortgages, thus excluding jumbo loans and government-insured loans, making it potentially less representative of the entire housing market. ### What was the primary role of the government-sponsored enterprises (GSEs) in the context of the FHFA House Price Index? - [ ] To set mortgage interest rates. - [ ] To insure all home loans. - [x] To purchase or securitize conforming mortgages. - [ ] To develop housing policies for rural areas. > **Explanation:** The primary role of the GSEs, Fannie Mae, and Freddie Mac, in the context of the FHFA House Price Index is to purchase or securitize conforming mortgages.

Thank you for engaging with our detailed analysis of the OFHEO Price Index and sharpening your real estate market knowledge through our quiz! Keep exploring comprehensive financial topics for continued learning and expertise.

Wednesday, August 7, 2024
Oil and Gas Lease
Offshore Financial Organizations and Activities
FHFA House Price Index (HPI) January 1, 1
Annual Mortgage Constant January 1, 1
Blockbusting January 1, 1
Budget Mortgage January 1, 1
Co-Mortgagor January 1, 1
Conforming Loan January 1, 1
Deed in Lieu of Foreclosure January 1, 1
Due-On-Sale Clause January 1, 1
Empty Nesters January 1, 1
Equity Buildup January 1, 1

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.