Buffalo-Cheektowaga, NY Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Buffalo-Cheektowaga, NY, Federal Housing Finance Agency (FHFA) House Price Index (HPI) is a weighted, repeat-sales index measuring average price changes in single-family houses with mortgages backed by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC). The HPI value for a particular quarter represents the average change in house prices during that quarter compared to house prices during the base period of the index. The HPI covers all nine U.S. Census divisions and is released on a quarterly basis.

As of the fourth quarter of 2019, the Buffalo-Cheektowaga, NY, FHFA HPI was 176.6, up 0.8 percent from the third quarter and up 3.4 percent from one year earlier. From its peak in the second quarter of 2006 to its trough in the first quarter of 2012, prices fell by 33 percent; since then they have risen by 64 percent through 2019:Q4 (see chart 1).

Chart 1

The rebound in home prices has been driven primarily by increases in demand for housing and tight supply conditions. The combination of strong job growth and historically low mortgage rates has boosted demand for housing across most markets nationwide over the past few years while at the same time new home construction remains well below pre-recession levels.

In addition to job growth and low mortgage rates, another factor driving up home prices is limited supply conditions resulting from years of underbuilding during and after the Great Recession as well as ongoing challenges with land development and lot availability that are making it difficult for builders to bring new homes to market quickly enough to meet rising buyer demand.

As we see in chart 2 below, since early 2012 there has been an increase in both purchase mortgage originations and refinance activity which likely contributed to higher home prices as buyers competed for a limited number of homes available for sale while at the same time more homeowners had equity available to tap through cash-out refinances if they chose to do so.

Chart 2