FHFA House Price Index: Up 1.0% In November, Another All-Time High

The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for November. Here is the opening of the press release:

Washington, D.C. – House prices rose nationwide in November, up 1.0 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 11.0 percent from November 2019 to November 2020. The previously reported 1.5 percent price change for October 2020 remained unchanged.

For the nine census divisions, seasonally adjusted monthly house price changes from October 2020 to November 2020 ranged from +0.3 percent in the West South Central division to +1.6 percent in the Pacific division. The 12-month changes ranged from +8.7 percent in the West South Central division to +14.0 percent in the Mountain division.

“House prices have risen by at least one percent for six consecutive months,” said Dr. Lynn Fisher, FHFA’s Deputy Director of the Division of Research and Statistics. “The acceleration has been slowing but annual gains now outpace the prior housing boom. Current conditions can be explained by fundamentals, including low rates and tight housing supply, which have been intensified by the pandemic.”

The chart below illustrates the monthly HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

House Price Index

In the chart above we see that the nominal HPI index has exceeded its pre-recession peak of what's generally regarded to have been a housing bubble. Adjusted for inflation, the index is now at 172.4, also at its all-time high.

The next chart shows the growth of the nominal and real index since the turn of the century.

HPI Growth since 2000

For an interesting comparison, let's overlay the HPI and the most closely matching subcomponent of the Consumer Price Index, Owners' Equivalent Rent of Residences (OER). Note: For an explanation of OER, see this PDF commentary from the Bureau of Labor Statistics.

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