Why did Freddie Mac decide to publish a purchase-transaction only CMHPI series?
Market transactions are the best way to measure changes in values, and Freddie Mac believes that researchers and other people with an interest in home price trends will find value in having a series based solely on home-purchase transactions. When the CMHPI was originally developed in 1994, the decision was made to include data from all Freddie Mac and Fannie Mae loan purchases, whether the loan was for a home purchase or for refinance so that there would be enough observations for the CMHPI to be statistically robust. The repeat-transactions index regression methodology that the CMHPI uses requires many more observations than most regression models for the values to be reliable. Although there are several known potential problems with appraisal information, good appraisal information is a valuable source of market prices and improves the index when samples are small. There are three reasons why samples may not be sufficient for estimation of the CMHPI in the absence of appraisal data
