AEI Charts of the Week: Expect the HPA Rate to Accelerate Further

With surging demand and tight supply, the rate of house price appreciation will follow suit.

The Daily Shot posted this series from the MBA showing a surging purchase application index for the week ending 3.29,19, posting the highest level of any year since 2010.

Source: Mortgage Bankers Association, WSJ Daily Shot

This next chart covers the top 100 metro areas and shows that supply is extremely tight for all price tiers but the high price tier (high is about 8% of the home finance market).

This final chart shows the rate of house price appreciation (HPA) has already turned up for all but the high price tier.  I expect the HPA rate to accelerate further in response to the drop in rates and surge in demand.  This will be most pronounced for the lower and low-med price tiers.

AEI House Price Appreciation Indexes are published nationally and by price tier.

  • The four tiers are set at the metro level, adjusted quarterly, and defined as follows:\y
    • Low: all sales at or below the 40th percentile of FHA sales prices
    • Low-Medium: all sales at or below the 80th percentile of FHA sales prices
    • Medium-High: all sales at or below the 125% of the GSE loan limit
    • High: Rest. HPAs are smoothed around the times of FHFA loan limit changes.
  • Tier shares as a percentage of national financed home sales:
    • Low: about 28%;
    • Low-med: about 28% of financed home sales nationally
    • Med-high: about 36% of financed home sales nationally
    • High: about 8% of financed home sales nationally


Edward J. Pinto

By Edward J Pinto

American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s Center on Housing Markets and Finance.  Along with AEI resident scholar Stephen Oliner, Pinto is creator of the Wealth Building Home Mortgage, a new approach to home finance designed to serve the twin goals of providing to a broad range of homebuyers – including low-income, minority, and first-time buyers – with a more reliable and effective means of building wealth than currently available under existing policies, while maintaining buying power similar to a 30-year loan.  He is currently researching approaches to increase the supply of market rate economical apartments for hourly wage earners. Active in housing finance for 45 years, he was an executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done ground breaking research on the role of federal housing policy in the 2008 mortgage and financial crisis.  He is now conducting research on the current house price boom that began in 2012. Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign. He can be reached at