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 2.0% 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 37th consecutive month of year-over-year increase. Dr. Frank Nothaft, chief economist at CoreLogic stated:
The homes for sale inventory continues to be limited while buyer demand has picked up with low mortgage rates and improving consumer confidence. As a result, there has been continued upward pressure on prices in most markets, with our national monthly index up 2 percent for March 2015 and up 6 percent from a year ago.”
Anand Nallathambi, president and CEO of CoreLogic stated:
All signs are pointing toward continued price appreciate throughout 2015. In fact, the strong month-over-month gain in March may be a harbinger of accelerating price appreciation as we enter the spring selling season. Tight inventories, job growth and the inexorable impact of demographics and household formation are pushing price levels in many states and especially large metropolitan areas like Dallas, Denver, Houston, Seattle and San Francisco Bay toward record levels.
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)
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
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