Econintersect: CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 5.0% year-over-year year-over-year (reported down 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 34th 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:
For the full year of 2014, home prices increased 7.4 percent, down from an 11.1-percent increase in 2013. Nationally, home price growth moderated and stabilized at 5 percent the last four months of the year. The moderation can be clearly seen at the state level, with Colorado, Texas and New York at the high end of appreciation, ending the year with increases of about 8 percent. This contrasts with previous appreciation rates in the double digits-for instance, Nevada and California which experienced increases of more than 20 percent earlier in 2014.
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Anand Nallathambi, president and CEO of CoreLogic stated:
Nationally, home price appreciation took a pause in November and December 2014 and we expect a slow start to 2015. As the year progresses, we expect upward pressure as low inventories and more first-time buyers drive up home prices.
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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)
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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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Source: CoreLogic
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