House Price Index

FHFA (the Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac) publishes the FHFA House Price Index. Required by law, it began in 1995 with OFHEO (FHFA's predecessor). It measures average price change for repeat sales of the same single-family homes from 100M+ Fannie Mae and Freddie Mac records back to 1975. The flagship Purchase-Only series tracks conforming purchases with seasonal adjustment; levels alone mean little and only changes count.

It is nominal, not inflation-adjusted, and does not track rents. It is neither mean nor median price: each home is matched to its own prior sale.

Transactions are grouped by loan origination date within each calendar month or quarter. The loan date counts, not the later purchase by the Enterprises. Data lag is about 2 months; reports appear at 9:00 AM Eastern Time on dates set near each summer's end.

Each release covers the United States and 9 divisions with files and charts. The quarterly report adds states and metros alongside monthly data.

Values are revised every period as new repeats and delayed loans arrive, mainly affecting recent ones. Positive change means appreciation over one-month, 12-month, one-quarter, and four-quarter spans, while negative change means depreciation. A Top-100 metro dashboard accompanies each release.

The suite has no fixed basket weights. Its parts are index variants plus a ladder from states to divisions to the nation.

• Purchase-Only: flagship headline series for conforming conventional purchases, seasonally adjusted.
• All-Transactions: adds refinance appraisals to the purchase sample, published without seasonal adjustment.
• Expanded-Data: adds FHA loans and county recorder records such as cash and non-conforming loans. FHFA uses it each year to set conforming loan limits.
• Distress-Free: drops short and bank-owned sales from the purchase sample since 2012Q2.
• Developmental series: cover Puerto Rico, counties, ZIP codes, census tracts, and manufactured housing.
• Geographic aggregation ladder: chains state growth into divisions and the nation with housing-stock weights.

FHFA published the 2023Q4 report on February 27, 2024. National prices rose 6.5% from 2022Q4 and 1.5% from 2023Q3; December 2023 rose 0.1% from November.

Prices rose in 49 of 51 areas, while Hawaii fell 3.4% and the District of Columbia fell 1.2%. All 9 divisions rose, from 10.3% in New England to 3.2% in West South Central. Metro gains reached 96 of the top 100, with Miami up 13.8% and Honolulu down 12.9%. Gains had run every quarter since 2012, though fourth-quarter growth lagged the third.

1. Repeat pairs: Combine Fannie Mae and Freddie Mac single-family loans, standardize addresses, and match consecutive records on the same home. Filters drop extremes, same-period repeats, and incomplete records; only conforming purchases remain, minus condos, coops, multi-unit, and planned-unit homes.
2. First-stage fit: Estimate log price changes between the two sales on time dummies by OLS, holding the base-period factor at zero.
3. Variance fit: Regress squared residuals on the gap and its square with no constant; longer gaps carry larger variance.
4. Weighted fit: Re-estimate by GLS, dividing each pair by its fitted variance so short-gap pairs weigh more. House A ($200,000 to $260,000 over 5 years) weighs less than House B ($300,000 to $312,000 over 1 year, log change about 0.0392).
5. Index numbers: Convert each factor to It = 100 times e raised to βt, so the base period reads 100. The standard error is σ(It) = It times σ(βt).
6. Aggregation and normalization: Chain state growth rates into divisions and the nation with housing-stock weights. Most series equal 100 in 1991Q1, except All-Transactions metro (1995Q1) and state and division (1980Q1).
7. Seasonal adjustment: Remove calendar-year patterns with the Census Bureau X-13 ARIMA procedure and automated model choice. Adjusted and unadjusted versions appear together.
8. Reading change: Appreciation between two periods equals (I2 - I1) / I1. From 100 to 104.9, appreciation is 4.9%.