Loan Officer | NMLS #17875
Branch NMLS #1651595
Market Forecast: FHFA House Price Index, Existing Home Sales, and New Home Sales
Posted On March 20, 2017
Last week, the Federal Open Market Committee (FOMC) voted to raise the benchmark interest rate. In response, mortgage rates trended downward. Long-term interest rates will move more slowly than short-term rates in reacting to movements by the Fed. This week, there will be several important housing reports including the Federal Housing Finance Agency’s house price index, existing home sales, and new home sales.
The Federal Housing Finance Agency’s (FHFA) house price index tracks changes in home value based on data from Fannie Mae and Freddie Mac. This index only measures conventional mortgages and does not include FHA, VA, or other government-insured mortgages. In December, the FHFA house price index appreciated by 0.4% month-over-month and 6.2% year-over-year.
The existing home sales report is the most telling barometer of housing market activity, since it accounts for the majority of transactions. From December to January, existing home sales increased at a rate of 3.3% month-over-month and 3.8% year-over-year. Steady growth in existing home sales indicates an active housing market.
New home sales track the sale of newly constructed homes. From December to January, new home sales dropped to a level of 555,000. New home sales trigger economic momentum because of the purchase of construction materials and the hiring of laborers to build the home.
According to the statement following the FOMC meeting, the economy is expanding at a moderate pace driven by hiring, consumer spending, and business spending. The Fed has suggested it will raise rates two additional times in 2017.