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Economy in Brief

U.S. FHFA House Price Index Moderates a Bit in February, but Year-on-Year Gains Still Strong
by Carol Stone, CBE  April 27, 2021

• House prices increased 0.9% in February.

• Year-to-year increase at 12.2% edges up to new high.

• All regions have participated in yearly double-digit advances.

The Federal Housing Finance Agency (FHFA) House Price Index increased 0.9% m/m in February following an unrevised 1.0% in January. Despite the month-on-month moderation, the year-on-year increase remained strong at 12.2% and indeed set a second consecutive record for the series, which began in January 1991. Thus, house prices are stronger at present than they were in 2004-2005, the run-up to the Great Recession.

By region, house prices were strongest on the month-by-month basis in the western part of the country: the West South Central, Mountain and Pacific states, tabulated by Census division. [The West South Central Census division includes Texas, Oklahoma, Arkansas and Louisiana,] In each of these Census Divisions, the year-on-year gains extended trends that began in May 2020 when the West South Central and Pacific had risen at 4.5% from a year earlier and the Mountain states at 6.8%. But the February 2021 data show year-on-year advances of 15.4% in the Mountain states, the strongest among all the regions, 14.2% in the Pacific division and 11.1% in the West South Central.

The smallest monthly increases in February were in the Middle Atlantic states at 0.3% and the South Atlantic at 0.4%. These Census divisions, however, had seen strong gains in other recent months such that their year-on-year gains were 12.1% in the Middle Atlantic and 11.3% in the South Atlantic areas. New England states saw a 1.0% month-on-month advance in February and a 14.0% surge over the last year.

The overall story then is that house prices have sustained long, strong and widespread increases with the upturns all beginning on a year-to-year basis from lows in May 2020. Regions with recent slower monthly gains had seen stronger increases in other recent months.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancings on the same kinds of properties. The indexes are based on transactions involving conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included. The FHFA data are available in Haver's USECON database.

FHFA U.S. House Price Index,
Purchase Only (SA %)
Feb Jan Dec Feb Y/Y 2020 2019 2018
Total 0.9 1.0 1.2 12.3 7.8 5.3 6.4
  New England 1.0 0.8 0.9 14.0 8.2 4.6 5.2
  Middle Atlantic 0.3 1.4 1.1 12.2 7.4 4.5 5.2
  East North Central 0.7 0.9 1.3 11.9 7.7 5.4 6.3
  West North Central 1.0 1.0 0.8 10.6 7.2 5.1 5.8
  South Atlantic 0.4 1.1 1.0 11.4 8.1 5.6 6.8
  East South Central 0.8 0.3 1.4 11.3 8.2 5.8 6.0
  West South Central 1.3 0.9 1.3 11.2 6.3 4.6 5.1
  Mountain 1.6 1.4 1.4 15.5 9.8 7.0 9.0
  Pacific 1.5 1.2 1.2 14.3 8.0 4.6 7.2
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