Federal Housing Finance Agency (FHFA) House Price Index (HPI)
Definition of 'Federal Housing Finance Agency (FHFA) House Price Index (HPI)'
This index is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. In contrast to other house price indexes, the sample is limited by the ceiling amount for conforming loans purchased by these government-sponsored enterprises (GSE).
February 2008: up to $729,750
2009: $417,000 to $625,500
This index covers the "most typical" house or dwelling that the average American will buy. As such, the level of this index will indicate how much equity is available to consumers in the form of home equity lines of credit. The more credit available to the consumer the more fuel to push the economy.
During the housing boom up until 2007 the economy saw plenty of home equity in excess of the debt owed on these homes and this helped to keep the economy running at high speed. Since the housing bubble burst consumers have not had that extra resource to be able to continue spending at the same rate and this has caused the slowdown since that period.
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