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

​Washington, D.C. – House prices rose nationwide in April, up 1.8 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI^®). House prices rose 15.7 percent from April 2020 to April 2021. The previously reported 1.4 percent price change for March 2021 was revised upward to a 1.6 percent increase.

For the nine census divisions, seasonally adjusted monthly house price changes from March 2021 to April 2021 ranged from +1.2 percent in the West North Central division to +2.6 percent in the Mountain and Middle Atlantic divisions. The 12-month changes ranged from +13.0 percent in the West North Central to +20.6 percent in the Mountain division.​

“House prices recorded another monthly and annual record in April," said Dr. Lynn Fisher, FHFA's Deputy Director of the Division of Research and Statistics. “This unprecedented price growth persists due to strong demand, bolstered by still-low mortgage rates, and too few homes for sale."

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.

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 179, also at its all-time high.

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

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.

HPI and OER moved in close parallel from the 1991 inception date of the former until early 1999 when the two parted company and HPI began accelerating into the housing bubble. HPI then fell 20.7% over the next 48 months to its March 2007 trough. Confirmation of the "bubble" designation for house prices is the 39.5% spread between HPI and OER in January 2006.

Are we in another housing bubble? The current spread is 44.1%, exceeding the "bubble designation" just mentioned.

Here we compare the Consumer Price Index for All Urban Consumers to both the Nominal and Real House Price Index, which is a similar comparison to what we do in our Case-Shiller update. Nominal HPI growth has clearly taken off since 2012. However, when adjusted for inflation, the House Price Index has not seen a dramatic increase since the late 1990s.

Our next update of the FHFA House Price Index will be on July 27.