A house price index (HPI) measures the price changes of residential housing as a percentage change from some specific start date (which has an HPI of 100). Methodologies commonly used to calculate an HPI are hedonic regression (HR), simple moving average (SMA), and repeat-sales regression (RSR).
The US Federal Housing Finance Agency (formerly Office of Federal Housing Enterprise Oversight, a.k.a. OFHEO) publishes the HPI index, a broad quarterly measure of the movement of single-family house prices.
The HPI is a weighted, repeat-sales index that measures average price changes in repeat sales or refinancings on the same properties in 363 metropolises. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975.
Since the HPI index only includes houses with mortgages within the conforming amount limits, the index has a natural cap and does not account for jumbo mortgages.
The HPI was developed in conjunction with OFHEO's (now FHFA) responsibilities as a regulator of Fannie Mae and Freddie Mac. It is used to measure the adequacy of their capital against the value of their assets, which are primarily home mortgages.
On July 30, 2008, OFHEO became part of the new Federal Housing Finance Agency (FHFA). Accordingly, the index is now termed the FHFA HPI.
See main article: Case-Shiller index.
The Case-Shiller index prices are measured monthly and track repeat sales of houses using a modified version of the weighted-repeat sales methodology proposed by Karl Case, Robert Shiller, and Allan Weiss. This means that, to a large extent, it can adjust for the quality of the homes sold, unlike simple averages.
The Case-Shiller index has a long lag time as a monthly tracking index. Typically, it takes about 2 months for S&P to publish the results, as opposed to 1 month for most other monthly indices and indicators. In addition, specific indexes are available for specific metropolitan areas and composite indexes for the top 20 and 10 metro areas nationwide.
FNC Inc. publishes the Residential Price Index based on data collected from public records blended with real-time appraisals of property and neighborhood attributes. The RPI is the mortgage industry's first hedonic price index for residential properties. The RPI is constructed to gauge price movement among non-distressed home sales and excludes sales of foreclosed properties.[1]
The RPI has a lag time of about two months as a monthly tracking index. Specific indices are available for specific metropolitan areas, and composite indices are available for the top 10, 20, 30, and 100[2] metro areas. The RPI is also available at the zip code level and can be constructed to track price trends for specific characteristics (e.g., ranch-style house, colonial-style house, etc.) since preferences can change over time.
HouseCanary publishes monthly HPI data at block, block group, zip code, metro division, and metropolitan levels. These indices include forecasts up to 3 years into the future.[1]
House Price Indices (HPIs) have been produced in the UK since around 1973, initially by mortgage providers and more recently by government bodies. More recently, they have come from property market websites.
| Index | Calculated by | Source data | Observations (approx) | Quality Adjustment Method | Local Indices | Frequency | Price Observations | |
|---|---|---|---|---|---|---|---|---|
| UK House Price Index | Office for National Statistics | 100k | HR | Yes | Monthly | Actual price paid | ||
| Calnea Analytics | 100k | RSR | Yes | Monthly | Actual price paid | |||
| Knight Frank | 100k | RSR | Yes | Monthly | Actual price paid | - | ||
| DCLG | DCLG | Lender data | 45k | SMA | Regional Only | Monthly | Mortgage completions | |
| Halifax | Loan approvals | 12k | HR | Regional Only | Monthly | Price agreed at time of loan approval | ||
| Nationwide | Nationwide | Loan approvals | 12k | HR | Regional Only | Monthly | Price agreed at time of loan approval | |
| FindaProperty.com | Calnea Analytics | Rental prices | Undisclosed | HR | Regional Only | Monthly | Rental prices | |
| Home.co.uk | Calnea Analytics | Asking prices online | 800k | SMA | Regional Only | Monthly | Asking price | |
| Pinerock Finance | Pinerock Finance | 28m | RSR & SMA | Yes | Monthly | Actual price paid | ||
| Asking prices online | Undisclosed | SMA | Regional Only | Monthly | Asking price | |||
| Financial Times | Acadametrics | Land Registry | 100k | SMA | Yes | Monthly | Actual price paid |
In the Republic of Ireland, the Central Statistics Office publishes a monthly Residential Property Price Index. Up until 2011, Permanent TSB and the Economic and Social Research Institute published a similar monthly houseprice index.
In India, National Housing Bank completely owned by Reserve Bank of India computes an index termed NHB RESIDEX. The index was formulated based on a pilot study covering 5 cities, Delhi, Mumbai, Kolkata, Bangalore and Bhopal representing the five regions of the country. Actual transactions prices are used to compute an Index reflecting the market trends. 2007 is taken as the base year for the study to be comparable with the WPI and CPI, although alternative variants using 2012 and 2017 as the base years are also calculated.[1] Some of the cities covered are Delhi with NCR, Bangalore, Mumbai, Kolkata, Bhopal, Hyderabad, Faridabad, Patna, Ahmedabad, Chennai, Jaipur, Lucknow, Pune, Surat, Kochi, Bhubaneshwar, Guwahati, Ludhiana, Vijayawada, Indore, Chandigarh, Coimbatore, Dehradun, Meerut, Nagpur and Raipur.[2] The list of cities covered in the index is gradually expanding.
In Canada, the New Housing Price Index is calculated monthly by Statistics Canada. Additionally, a resale house price index is also maintained by the Canadian Real Estate Association, based on reported sale prices submitted by real estate agents, and averaged by region. In December 2008, the private National Bank and the information technology firm Teranet began a separate monthly house price index based on resale prices of individual single-family houses in selected metropolitan areas, using a methodology similar to the Case-Shiller index[3] and based on actual sale prices taken from government land registry databases. This allows Teranet and the National Bank to track prices without allowing periods of high sales in one city to push up the national average.[4] The National Bank also operates a forward market on Canadian housing prices.
There are three primary approaches to constructing quality-controlled index for transaction-based index: the hedonic, repeat-sales, and hybrid methods. The hedonic approach utilizes both time variable hedonic and cross-sectional hedonic models to construct housing price indices. In the hedonic model, property prices are analyzed based on the property's characteristics, which are applied either on a period-by-period basis or estimated using pooled transaction data with time dummies as additional factors.[5]