Econintersect: CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 5.5% year-over-year year-over-year (reported up 0.1% month-over-month). There is considerable backward revision in this index which makes monthly reporting problematic. CoreLogic HPI is used in the Federal Reserves’s Flow of Funds to calculate the values of residential real estate.
This is the 33rd consecutive month of year-over-year increase, and the second month in a row of improving growth. Sam Khater, deputy chief economist at CoreLogic stated:
After decelerating for most of the year, home price growth has been holding firm between a 5-percent and 6-percent growth rate for the last four months. However, pockets of weakness are clear in Baltimore and Washington D.C., and three of the top four states with the highest price appreciation are energy intensive and had been benefiting from the energy boom which is currently receding as oil prices trend downward. These states–Texas, Colorado and North Dakota, may see some downward pressure on prices in 2015.
Anand Nallathambi, president and CEO of CoreLogic stated:
The pace of home price gains have slowed as we exit 2014 but this is probably only a temporary lull. While the CoreLogic HPI Forecast shows a slight dip in prices next month, we believe that prices will be up a year from now as continued economic growth fuels buyer confidence and their willingness to purchase a home and invest in their future.
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)
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 prices are improving – and the rate of growth is now marginally improving after almost a year of declining growth rate.
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)
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