New Orleans-Metairie, LA Federal Housing Finance Agency Home Price Index (FHFA HPI)

The New Orleans-Metairie, LA, Federal Housing Finance Agency (FHFA) house price index (HPI) is a weighted, repeat-sales index measuring average price changes in single-family houses in the metropolitan statistical area. The HPI is a broad measure of the movement of single-family house prices and covers both new and existing houses.

The FHFA HPI for New Orleans-Metairie, LA was 199.067 in December 2020, up 1.3 percent from November and up 10.8 percent from December 2019. This was the fourth consecutive month of positive year-over-year growth and the largest annual increase since August 2005. The monthly increase was driven by a 0.9 percent increase in prices for existing homes and a 2.2 percent increase in prices for new homes.

The FHFA HPI is calculated using data from Freddie Mac's Primary Mortgage Market Survey® (PMMS®), which covers approximately 75 percent of U.S. mortgage transactions each month through its sample of conventional conforming home purchase loans originated by lenders nationwide." Existing home sales data are also used to supplement Freddie Mac's PMMS® data when necessary." Data on new home sales are obtained from the U.S Census Bureau's Survey of Construction (SOC). The FHFA HPI uses a three-month moving average process to smooth random volatility inherent in monthly estimates."

As of December 2020, the New Orleans metro area had recovered 87% of its pre- Katrina value as measured by the FHFA House Price Index." In contrast, nationally, housing values have recovered to their pre-recession peak as measured by the Case Shiller National Home Price Index." However, when considering only inflation adjusted values," New Orleans has yet to recover to its pre-Katrina levels."

There are several reasons why housing values have not yet fully recovered in New Orleans including: 1) population loss - since Katrina, the population of Greater New Orleans has declined by 8%, or about 200,000 people; 2) slow economic growth - since 2007, Greater New Orleans' GDP has grown at an annual rate of only 1%, compared to national growth rates of 2% or higher; 3) limited availability of financing - many potential buyers cannot obtain financing due to stricter lending standards; 4) high insurance costs - insurance premiums have increased significantly since Katrina due largely to hurricane risk; 5) depressed wages - wages in Greater New Orleans have not kept pace with inflation over the past decade; 6) blighted properties - there are still tens of thousands of blighted properties throughout Greater New Orleans that depress neighboring property values; 7) lack of affordable housing - there is a shortage of affordable housing units available for purchase or rent; 8) elevated poverty rates - about one quarter of all residents in Greater New Orleans live below the poverty line which limits demand for housing; 9) negative perceptions - many people outside Louisiana still perceive Greater New Orleans as being unsafe and prone to flooding which deters potential buyers and renters alike."