The Home Price Index (HPI) in the US measures price changes in single-family homes over a period of time, indicating whether mortgage prices are going up or down. It is calculated using information from major mortgage lenders and should be used in conjunction with other economic factors to get an accurate image of the real estate market. The HPI is always measured against previous levels and reflects the broader economic climate.
In the United States, a Home Price Index, or HPI, is a measure of price changes in single-family homes over a specified period of time. Using information obtained from major mortgage lenders, this index is an indicator of whether mortgage prices for both new homebuyers and those refinancing on their existing homes are going up or down. The home price index can also be used to show loan delinquency levels and the overall affordability of home prices in the US. It is a tool best used in conjunction with other economic factors to get an adequate image of the real estate market.
When people decide to buy a new home, they need to get all the pertinent information about current price levels in order to make a realistic offer. Local prices are often affected by the national image of housing. For that reason, consumers in the United States need some sort of overview of the real estate market before they go out to see if they can afford a home loan. The house price index is an effective tool for that very purpose.
Calculating the home price index requires information from large institutional lenders whose loans comprise the majority of mortgages taken out to buy homes in the US These lenders, FANNIE MAE and FREDDIE MAC, take information from certain major cities and transmit information on home prices as well as the number of refinances and foreclosures. From this information, the HPI is calculated and updated on a semi-regular basis.
It is important to understand that the house price index is always measured against previous levels. For this reason, it is known as a chain price index. As an example, if calculated on a monthly basis, the current HPI will be judged in terms of the previous month’s levels. The exchange rates between the two months would give an indication of whether prices were going up or down. Since the HPI is formed in this way, it gives potential homebuyers some context for the market they are about to enter.
Of course, house prices often reflect the broader economic climate. For that reason, it is advisable for those who study the housing market to judge the house price index in relation to other economic factors. National interest rates will often have a large impact on the housing market, as these rates are often the basis for the rates offered by mortgage lenders. Also, inflation rates should be studied to see how they compare to rising or falling house prices.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
