Lesson 1 of 4
Measuring house prices
The FHFA House Price Index measures average price changes in repeat sales or refinancings of the same single-family homes. Source 1
Comparing the same homes over time is called a repeat-sales index. FHFA uses a modified version of the Case-Shiller method. Source 2
The data come from mortgages that Fannie Mae and Freddie Mac bought or securitized, back to 1975. So the flagship index covers conforming, conventional loans, and leaves out condominiums, co-ops and multi-unit properties. Source 2
FHFA publishes it monthly and quarterly. The flagship index is seasonally adjusted and uses home purchases only. Source 2
Past values get revised, because Fannie Mae and Freddie Mac keep buying older loans that add information about earlier periods. Source 2
Lesson 2 of 4
Permits, starts and completions
Each month the Census Bureau and HUD publish New Residential Construction: building permits, housing starts and completions. Source 3
Permits come from the Building Permits Survey, which covers about 20,000 permit-issuing places. Census estimates that less than 2 percent of new homes are built where no permit is required. Source 4 Source 5
A permit is an authorization, not a start. Census counts a home as started when excavation begins for its footings or foundation, and it tracks units that are authorized but not yet started. Source 6
For an apartment building, all of its units count as started when excavation for the building begins. A house counts as completed when all its finished flooring is installed, or when it's occupied, if that comes first. Source 6
Lesson 3 of 4
Annual rates and margins of error
Monthly construction numbers are usually shown as a seasonally adjusted annual rate: the seasonally adjusted monthly figure times 12. It lets you compare a month with a year. It isn't a forecast. Source 7 Source 8
The estimates are revised, and each release says how much the early numbers typically change and gives a margin of error for each change. When Census can't tell a change apart from zero, it marks it in the release. Source 3
Lesson 4 of 4
Reading housing data fairly
The index measures average price changes. A metro's index rising doesn't tell you what any one home is worth; an index isn't an appraisal. Source 1
Snoki's Housing Desk reports prices, permits, starts and rates by metro area. It describes the numbers, not neighborhoods or the people in them, and it doesn't steer anyone toward or away from any place. See the disclaimer.
Check yourself
Terms in this path
Sources
- FHFA: FHFA House Price Index (opens in a new tab)
- FHFA: FHFA House Price Index FAQs (opens in a new tab)
- Census Bureau: New residential construction (opens in a new tab)
- Census Bureau: Building Permits Survey methodology (opens in a new tab)
- Census Bureau: Survey of Construction methodology (opens in a new tab)
- Census Bureau: Survey of Construction definitions (opens in a new tab)
- Census Bureau: New residential construction press release FAQs (opens in a new tab)
- Census Bureau: New residential sales press release FAQs (opens in a new tab)
This guide explains how filings and data releases work. It isn't investment advice, and it never tells you to buy, sell or hold anything. Rules change: the linked sources are the final word.