House Price Index

The House Price Index (HPI) is a widely used measure of changes in the price of residential properties over time, providing valuable insights into trends in the real estate market. It is published by various organizations globally, with the Federal Housing Finance Agency (FHFA) being the primary source for HPI data in the United States. The HPI helps track the appreciation or depreciation of home values, offering critical information for homeowners, buyers, lenders, and policymakers.

The HPI is calculated using data on repeat sales or refinancings of the same properties over time, making it a reliable gauge of market conditions. By tracking how the prices of individual homes change from one sale to the next, the HPI offers a more accurate reflection of market trends than measures that simply average the prices of all homes sold in a given period. It covers various property types, including single-family homes and, in some cases, multifamily residences.

The HPI includes several different indexes. The all-transactions index measures both purchase prices and appraisals from refinancings, while the purchase-only index focuses solely on the sale prices of homes. There are also regional indexes that provide insights into how house prices are shifting in specific areas, helping to identify trends that might be localized to certain states, cities, or neighborhoods.

The HPI is essential for a range of stakeholders. For prospective buyers, it offers insights into whether home prices are rising or falling in a specific market. Lenders use the HPI to assess risks associated with mortgage lending, while investors and developers rely on it to make informed decisions about real estate investments. Policymakers and economists use the HPI to understand housing market conditions and to develop policies aimed at stabilizing or promoting affordable housing.