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posted on 06 December 2016

October 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved to 6.7%.

CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 6.7 % year-over-year year-over-year (reported up 1.1 % month-over-month). Last month's 6.3 % year-over-year gain was revised downward to 5.7 %. 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 6.7 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 6.7 % was really 5.7 % (similar to what happened this month). Overall, home price growth trends seem to be flat (rate of increase nearly unchanged) - but how long this will last due to the insufficient home inventories.

Dr Frank Nothaft, chief economist for CoreLogic stated:

While national home prices increased 6.7 percent, only nine states had home price growth at the same rate of growth or higher than the national average because the largest states, such as Texas, Florida and California, are experiencing high rates of home price appreciation

z corelogic2.PNG

Anand Nallathambi, president and CEO of CoreLogic stated:

Home prices are continuing to soar across much of the U.S. led by major metro areas such as Boston, Los Angeles, Miami and Denver. Prices are being fueled by a potent cocktail of high demand, low inventories and historically low interest rates. Looking forward to next year, nationwide home prices are expected to climb another 5 percent in many parts of the country to levels approaching the pre-recession peak.

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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