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posted on 04 October 2016

August 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved to 6.2%.

CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 6.2 % year-over-year year-over-year (reported up 1.1 % month-over-month). Last month's 6.0 % year-over-year gain was revised downward to 5.4 %. CoreLogic HPI is used in the Federal Reserves's Flow of Funds to calculate the values of residential real estate.

Analyst Opinion of CoreLogic's HPI

CoreLogic has been revising their data significantly downward in the following month - I would not take the 6.2 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 6.2% was really 5.6 %. Overall, home price trends seem to be flat (nearly unchanged) - but how long this will last due to the insufficient home inventories?

Dr Frank Nothaft, chief economist for CoreLogic stated:

Home prices are now just 6 percent below the nominal peak reached in April 2006. With prices forecasted to increase by 5 percent over the next year, prices will be back to their peak level in 2017.

z corelogic2.PNG

Anand Nallathambi, president and CEO of CoreLogic stated:

Housing values continue to rise briskly on stronger fundamental and investor-fueled demand, as well as lack of adequate supply. This continued price appreciation is contributing to a growing affordability crisis in many markets around the country.

Comparison of Home Price Indices - Case-Shiller 3 Month Average (blue line, left axis), CoreLogic (green line, left axis) and National Association of Realtors (red line, right axis)

z existing3.PNG

The way to understand the dynamics of home prices is to watch the direction of the rate of change - and not necessarily whether the prices are getting better or worse. Home price rate of growth is now marginally improving.

Year-over-Year Price Change Home Price Indices - Case-Shiller 3 Month Average (blue bar), CoreLogic (yellow bar) and National Association of Realtors (red bar)

z existing5.PNG

Caveats Relating to Home Price Indices

There is no such thing as an "accurate" home price index. CoreLogic HPI is a repeat sales type index which should not be skewed by changes in the mix of home sales. For more information, please read: http://www.philadelphiafed.org/research-and-data/publications/research-rap/2014/house-price-indexes.pdf

Steven Hansen

Source: CoreLogic



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