Wednesday, April 2, 2014

FHFA: Colorado Home Price Growth Falls Behind National Growth Rate

Colorado's House Price (Expanded-Data) Index (HPI), measured by the Federal Housing and Finance Agency (FHFA), rose 7.5 percent from the fourth quarter of 2012 to the fourth quarter of 2013. According to the fourth-quarter 2013 HPI, released last month by FHFA, the home price index for Colorado, in year-over-year comparisons, has risen for the eighth time in a row, fell to the lowest year-over-year growth rate seen in five quarters. Looking at the past two years overall, however, growth rates are the highest seen since the dot-com boom of the late 1990s in Colorado.

The Colorado HPI is now about even (up 0.03 percent) with the previous peak, reached during 2006.  The national index is still down 15 percent from its peak, which it also reached during 2006.

The HPI for the United States rose 7.7 percent from the fourth quarter of 2012 to the fourth quarter of 2013, and is the seventh quarter in a row of year over year index increases.

The first graph shows the Colorado HPI compared to the US HPI since 2000. Since the peak period, the US HPI has fallen farther than the Colorado index. The Colorado index turned up significantly during the second quarter of 2012, has moderated over the past quarter.

In the second graph is shown the year-over-year change in the HPI for both Colorado and the US. This more fully shows to what degree the HPI has fallen in recent years for both Colorado and the US. The national HPI has fallen farther -or increased less- than the Colorado HPI in every quarter since the second quarter of 2007. The home price index in Colorado has been increasing longer than the US as a whole, although Colorado showed less growth than the nation in the index from 2001-2007.

Notably, the Colorado HPI growth rate fell below that of the nation during the fourth quarter of 2013. This followed seven quarters of the Colorado growth rate significantly outpacing the national rate. Although Colorado economic indicators repeatedly showed Colorado outpacing the nation during 2012, we have seen several economic indicators (such as the Coincident Index) suggesting that Colorado's growth has moderated and as of 2012 was similar to national growth rates, or slightly below.

The index values presented and analyzed in this article are not seasonally adjusted.

Note: During the second quarter of 2011, the Federal Housing and Finance Agency released, for the first time, its Expanded-Data House Price Index. The new index is "Estimated using Enterprise, FHA, and Real Property County Recorder Data Licensed from DataQuick[.]"

In other words, the data source is much more broad than the old index which relied only on GSE information.

However, at the metro-area level, we'll still need to rely on the older GSE-data index until FHFA expands its new index into the metro areas.