MBA Chart of the Week: Federal Housing Finance Agency House Price Indexes

As of the second quarter, the Federal Housing Finance Agency’s seasonally adjusted, expanded-data house price index was nearly identical to the level of the index observed in third-quarter 2007.   

This benchmark price level is important because government-sponsored enterprises’ conforming loan limits are not allowed to rise again until house prices exceed their pre-crisis levels, designated by FHFA as the price level from the expanded-data HPI in third-quarter 2007.   

This week’s chart shows three different HPIs produced by FHFA:  the all-transactions, the purchase-only and the expanded-data HPI.   

All three indexes are repeat sale indexes; however, they use different underlying house price data. The all-transactions index and the purchase-only index rely on house price data from mortgages purchased by the GSEs (with the all-transactions index including refinances and therefore appraisal valuations). The expanded-data HPI goes beyond GSE data to also incorporate information on home sales financed with mortgages insured by FHA as well as other home sales transactions observed in deed records. Since the crisis, the expanded-data HPI has lagged the other two indexes and this is the first time that it has returned to 2007 levels.  

Extrapolating from price levels during the second quarter of this year, FHFA could raise the conforming loan limit for the calendar year 2017, the first such increase since 2006.  

To view the Chart of the Week, click https://www.mba.org/news-research-and-resources/forecasts-data-and-reports/forecasts-and-commentary/chart-of-the-week.  

(Lynn Fisher is vice president of research and economics with the Mortgage Bankers Association; she can be reached at lfisher@mba.org. Joel Kan associate vice president of economic forecasting with MBA; he can be reached at jkan@mortgagebankers.org.)