Home Price Growth Continues to Moderate in May


The Federal Housing Finance Agency (FHFA) and the Standard and Poor’s/Case-Shiller recently released their respective home price indexes for May.

The House Price Index (HPI) data reported by the Federal Housing Finance Agency (FHFA) shows house prices rose at an annual growth rate of 5.4% in May, higher than the 4.7% in April and the 3.8% in March. The Standard and Poor’s/Case-Shiller reported that the Home Price Index rose at an annual growth rate of 0.5% in May, slightly higher than the 0.4% in April.


The annualized growth rates of the two home price indexes have been volatile month to month, but provide a detailed measure of the pre-boom stability, boom period acceleration, subsequent collapse and recovery of prices. Both of them turned negative by 2007, declined to the trough in 2008, and reached a double digit peak in 2013 but have decelerated to more sustainable levels since then. Noticeably, the annualized growth rate of the S&P/Case-Shiller Home Price Index has been significantly less volatile than that of the FHFA House Price Index. That is because the S&P/Case-Shiller Home Price Indexes are calculated monthly using a three-month moving average.



The blue line and red line represent the levels of the FHFA House Price Index and the S&P/Case-Shiller Home Price Index from 1991 to 2015, respectively. Despite the differences apparent in the monthly growth rates, the levels of the indexes show roughly similar price dynamics over their histories.


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