House Price Indices

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest housing price indices data, including the FHFA index.

• This week NAR released existing home sales and median home price information while the FHFA released their housing price index data.  Both data series showed continued gains in home prices with some deceleration suggesting that the pace of home price increase should fall back into a more normal range in the next few months.
• Home sales edged up slightly in December finishing the month slightly below the year ago sales pace.  For the year, sales were up 9.1 percent.
• In the same release, NAR showed year over year house price gains of 9.9 percent—a solidly above average increase, and only the second month in the last 13 for house price gains to register less than 10 percent.  For the calendar year, the median home price rose 11.5 percent over 2012.  At the same time, the FHFA reported a 7.6 percent home price rise for the year ending November 2013.
• NAR reports the median price of all homes that have sold while FHFA reports the results of a weighted repeat-sales index.  Because home sales among higher priced properties have been growing more than among lower price tiers, the NAR median price has risen by more than the weighted repeat sales index—which computes price change based on repeat sales of the same property.
• FHFA sources data primarily from Fannie and Freddie mortgages, transactions using prime conventional financing, and misses out on cash transactions as well as jumbo, subprime, and government backed transactions such as those using VA or FHA financing.
• FHFA releases data at the Census division level and it confirms the trend seen in NAR measures.  The most robust gains from a year ago were in the West.  NAR reported price change of 15.8% in November and 16.0% in December.  According to FHFA year over year prices rose 15.4 percent in the Pacific division which includes Hawaii, Alaska, Washington, Oregon, and California and 10.7 percent in the Mountain division which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico.
• Likewise, NAR data showed the smallest price gains from a year ago in the Northeast (5.7% for the year ending in November and 3.6% for the year ending in December), and FHFA showed a similar pattern.  Prices rose 4.2 percent in New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut) and 3.2 percent in the Middle Atlantic states (New York, New Jersey, Pennsylvania) from one year ago.