Awaiting July's Home Price Index Results

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Peoples Home Equity comments on the FHFA's home price index before its release this morning.

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Since 1991 the index has averaged a 0.27% monthly change

Peoples Home Equity is awaiting the results of Federal Housing Finance Agency’s (FHFA) house price index this morning.

The FHFA’s monthly house price index which is a broad measure of home price movements began back in 1991. As stated on the FHFA website, the index “is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties.” Over the past 12 months the home price index has been positive for 10 months. With just a -0.1% decline in November 2013, and a 0% change in April 2014 the housing price index has had a great run. Since 1991 the index has averaged a 0.27% monthly change. During booming and bust periods, the index has increased a record 1.42% in March 2013 and fell -1.72% in November 2008.

As shown on, the July forecast and consensus is that the index will post an increase of 0.24%-0.4%. This may very well be true given that the July reading is in the past when home sales and prices were still climbing strong during the summer. Peoples Home Equity thinks another increase in the index would simply reinforce how strong the housing recovery has been. A decline would indicate that the market was slowing or trying to find equilibrium. Thus far, US real estate has been ridden by a lack of supply and high demand. The large amount of foreclosures that once existed on the market is drying up. More Americans who have obtained jobs are now competing for a lower amount of properties available which is pushing home prices higher and higher.

In order to compete with more individuals bidding on fewer homes Peoples Home Equity strongly encourages all prospective mortgage applicants to submit their paperwork and see if they are approved for a home loan. One cannot shop for a home without the assistance of a mortgage pre-approval.

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Giorgio U Ferrero
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