Econintersect: CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 5.6% year-over-year year-over-year (reported up 1.1% 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 36th consecutive month of year-over-year increase. Dr. Frank Nothaft, chief economist at CoreLogic stated:
Since the second half of 2014, the dwindling supply of affordable inventory has led to stabilization in home price growth with a particular uptick in low-end home price growth over the last few months. From February 2014 to February 2015, low-end home prices increased by 9.3 percent compared to 4.8 percent for high-end home prices, a gap that is three times the average historical difference.
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Anand Nallathambi, president and CEO of CoreLogic stated:
In terms of home price appreciation, this has been the hottest spring in nine years. Home prices have now increased for 39 straight months as improved housing market and macro-economic fundamentals and tight supplies combine to support the positive trend. Assuming a continued benign interest rate environment, we expect home prices to rise by an additional five percent over the next twelve months.
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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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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
Source: CoreLogic
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