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FMHPISM Frequently Asked Questions

  1. When and how often is the FMHPISM released?
  2. How is FMHPI calculated?
  3. What data are used to estimate the FMHPI?
  4. Are properties in the Freddie Mac and Fannie Mae dataset different from average properties in the United States?
  5. What is the conforming loan limit for Freddie Mac loans?
  6. What transactions are included in the FMHPI?
  7. How is the national index constructed?
  8. Is the FMHPI seasonally adjusted?
  9. Is the FMHPI adjusted for inflation?
  10. How is the FMHPI different from the index that Freddie Mac used to publish, the Conventional Mortgage Home Price Index (CMHPI)?
  11. When did Freddie Mac stop publishing the CMHPI?
  12. Do you publish the weights used to aggregate state indexes to the US index?
  13. What is the base month for the FMHPI?
  14. How can I interpret index values?
  15. Are the values of the FMHPI ever revised?
  16. How are Metropolitan Statistical Areas defined?
  17. Why do the FMHPI archives only go back to 2011?
  1. When and how often is the FMHPI released?

    The FMHPI is calculated monthly but is released after the end of each calendar quarter. For example, the FMHPI series for October, November, and December are published in late February of the following year.
  2. How is FMHPI calculated?

    The FMHPI is calculated using a repeat-transactions methodology. Repeat transactions indexes measure price appreciation while holding constant property type and location, by comparing the price of the same property over two or more transactions. The change in price of a given property measures the underlying rate of appreciation because basic factors such as physical location, climate, housing type, etc., are constant between transactions. Averages of appreciation rates for different geographic areas and time periods are calculated using statistical regressions and the index values are derived from these averages. For a more technical description, see “The Freddie Mac House Price Index”.

     

  3. What data are used to estimate the FMHPI?

    Freddie Mac uses a dataset that includes valuation and location data for the combined portfolio of loans that were purchased by either Freddie Mac or Fannie Mae since January 1975. This dataset is updated monthly with new purchases from the two firms and, as of January, 2011, contains over 25 million transaction pairs.

    Repeat transactions in this dataset are identified as two first-lien mortgages originated on different dates for the same property address, that are financed by loans purchased by either Freddie Mac or Fannie Mae.

  4. Are properties in the Freddie Mac and Fannie Mac dataset different from average properties in the United States?

    The sample of loans in the dataset covers every state, although it reflects Freddie Mac and Fannie Mae’s collective market coverage and thus is not random across states. Furthermore, data are limited to one-family detached and townhome properties that are financed by first-lien conventional and conforming loans. The FMHPI further excludes planned unit developments (PUDs), condominium, and co-operative properties.

  5. What is the conforming loan limit for Freddie Mac loans?

    Freddie Mac and Fannie Mae are authorized to purchase only conforming loans, or loans that fall below certain size limits determined by Congress. For 2008 through 2011, the limit for conforming loans is $417,000 for one-family homes in most areas of the country, although certain high-cost areas face higher limits. For more information on conforming loan limits, see www.fhfa.gov.

  6. What transactions are included in the FMHPI?

    The FMHPI includes both loans originated for home purchases as well as appraisal values for refinance transactions in the data pairs, with the restriction that at least one of the two transactions represents a purchase. In other words, refinance-to-refinance matched pairs are excluded from the calculations. The use of refinance transactions more than quadruples the sample size to over 25 million pairs between 1975 and 2010. Refinance adjustment terms are included in the regression specification to account for the possibility that appraisal values might systematically differ from purchase prices. These additional transactions greatly increase the power of estimation, especially at smaller levels of geography.

  7. How is the national index constructed?

    Freddie Mac aggregates the state-level indexes in FMHPI to a national index using weights based on the estimated property value underlying active Freddie Mac loans. Freddie Mac portfolio weights equal the estimated property value underlying active Freddie Mac loans in the one- to four-family portfolio (including PUDs and condominiums) as of December 31 of the previous year. Portfolio weights are recalculated early in each calendar year, according to the prior end-of-year active loan portfolio. Updated weights are then applied to all index values, not just those of the prior year.

    The National FMHPI measures the average appreciation of house values within the currently active Freddie Mac portfolio.

  8. Is the FMHPI seasonally adjusted?

    No.

     

  9. Is the FMHPI adjusted for inflation?

    No.

     

  10. How is the FMHPI different from the index that Freddie Mac used to publish, the Conventional Mortgage Home Price Index (CMHPI)?

    The national indexes differ in two important ways. First, the national FMHPI is a weighted average of state indexes whereas the national CMHPI was a weighted average of nine census region indexes. Second, the FMHPI uses Freddie Mac portfolio share weights to construct the national index, whereas the CMHPI used census region counts of single-family housing.

    The FMHPI also differs from the CMHPI in its treatment of refinance transactions.  The Classic CMHPI included refinance transactions in the estimation, but did not account for disparities between appraisals for refinance purposes and purchases. The FMHPI includes these transactions and uses statistical methods to account for the possibility that appraisal values might systematically differ from purchase prices. The purchase-only CMHPI excluded refinance transactions. For a more technical description, see “The Freddie Mac House Price Index”.

     

  11. When did Freddie Mac stop publishing the CMHPI?

    In February, 2011, Freddie Mac replaced the CMHPI with the FMHPI as its externally published house price index.
  12. Do you publish the weights used to aggregate state indexes to the National index?

    No.

     

  13. What is the base month for the FMHPI?

    The FMHPI is calculated so that the index value for December 2000 equals 100.

  14. How can I interpret index values?

    Index values represent the value of single-family housing, relative to the last month in the series. To calculate the growth rate between any two months, simply apply the formula: (I2/I1)-1, where I1 is the index value of the first month and I2 is the index value of the second month.

     

  15. Are the values of the FMHPI ever revised?

    An index value provided in any given release may be slightly different from indexes in subsequent releases. Index values change as new data become available each month because each new data pair influences the index values for each month between transactions. Values for the most recent months typically see the largest revisions because new transaction pairs have a proportionally smaller impact on older values, but larger impact on more recent values, where the number of transactions pairs spanning recent months is relatively small.

    The national FMHPI is also revised between Q4 and Q1 of the following year to reflect the recalculation of the geographic weights used for aggregating state indexes to a national index. Portfolio weights are recalculated early in each calendar year, according to the prior end-of-year active loan portfolio. Updated weights are then applied to all index values, not just those of the prior year.

  16. How are Metropolitan Statistical Areas defined?

    The FMHPI uses the most recent Office of Management and Budget (OMB) definition of Metropolitan Statistical Area (MSA).
  17. Why do the FMHPI archives only go back to 2011?

    Freddie Mac began publishing the FMHPI in February, 2011. Prior to the release of the FMHPI, Freddie Mac published the Conventional Mortgage Home Price Index (CMHPI). The CMHPI is no longer in production or available to the public.

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