The FHFA compiles the HPI and releases it every month. The Home Price Index is based on single-family transactions involving conventional and conforming mortgages. It is a weighted repeat sales index that tracks average price changes in repeat sales or refinancing of the same properties. A quarterly HPI report is published, as well as a monthly report.
Data is compiled by evaluating Fannie Mae and Freddie Mac mortgages that have been acquired or securitized.
How is the HPI Used?
Buyers, sellers, and investors can use HPI statistics to evaluate if property prices in various locations in the United States are rising or falling. This data can help investors assess how probable it is that their investments in single-family houses will pay off. They can then calculate what price and how much of a mortgage is most likely to provide a return. Sellers can utilize HPI data to determine the best listing price, which is high enough to maximize profit but not so expensive that it scares purchasers away.
Home purchasers might benefit from HPI information as well. Buyers might improve their chances of paying a fair price for their new home by researching house prices in the areas where they intend to buy. Do you want to examine the Home Price Index data for a certain city? The HPI’s list of the biggest cities contains information on the country’s major cities and their surrounding territories.
You can use these figures to see if costs are growing in the cities where you wish to live. Perhaps you’re a business owner seeking the greatest offer. You can come across cities whose prices have been declining but are now gently rising again. This can allow you to purchase a home in a growing community before prices skyrocket.
As the value rises and after you renovate your home, you can be able to demand a greater price when you are ready to sell.
FHFA House Price Index Calculator
The FHFA’s HPI calculator can help you assess how much your own home’s value has increased since you bought it. You’ll be sent to the state where you live when you log in. You can then select one of the state’s metropolitan statistical regions. If your individual community is not listed, select the broader MSA in which your village, city, or town is located.
You can then specify which quarter you purchased your house in. For example, if you purchased in August of 2018, you would select the “2018 Quarter 3” option. Next, select the quarter for which you wish to estimate your home’s current worth, which is generally the most recent data available from the Home Price Index. You may, for example, select the second quarter of 2022 as the valuation quarter.
Enter the purchase price of your home at the time it was purchased, and then click the “Calculate” button. The calculator will then tell you how much your home is currently worth and how much it may have increased in value since you purchased it. But keep in mind that the HPI calculator only offers you an estimate. For a more precise value for your property, you’ll need to engage with a real estate agent or have your home appraised.
Why is the HPI Derived Using Fannie Mae and Freddie Mac Data?
Congress established Fannie Mae and Freddie Mac to provide liquidity in the mortgage market. Mortgages are purchased from lenders and either held or sold as mortgage-backed securities by the agency. Fannie Mae and Freddie Mac are the country’s main mortgage loan guarantors. As a result, they may offer the FHFA a wealth of housing data for inclusion in HPI reports.
Endnote
The HPI can assist you in identifying whether or not house prices in a market are rising. The HPI is usually reported monthly and measures the change from the previous month and year-over-year. However, HPI is simply one tool for determining if it is a suitable time to purchase or sell a property. Other circumstances, such as if your family is expanding, you’re relocating for a new career, or you’re ready to downsize, should also be considered.
This can help you make an enlightened decision as a buyer, seller or investor.
