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posted on 07 February 2017

December 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved to 7.2%.

CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 7.2 % year-over-year year-over-year (reported up 0.8 % month-over-month). Last month's 7.1 % year-over-year gain was revised downward to 6.5 %. 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 7.2 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 7.1 % was really 6.5 % (similar to what happened this month). Overall, home price growth trends seem to be marginally trending up - likely do to the low inventory levels of homes for sale.

Dr Frank Nothaft, chief economist for CoreLogic stated:

As of the end of 2016, the CoreLogic national index was 3.9 percent below the peak reached in April 2006. We expect our national index to rise 4.7 percent during 2017, which would put homes prices at a new nominal peak before the end of this year.

z corelogic2.PNG

Anand Nallathambi, president and CEO of CoreLogic stated:

Last year ended with a bang with home prices up over 7 percent nationally, led largely by major metro areas. We expect prices to continue to rise just under 5 percent in 2017 buoyed by lack of supply and continued high demand.

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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