CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 6.2 % year-over-year year-over-year (reported up 1.8 % month-over-month). Last month’s 6.7 % year-over-year gain was revised downward to 5.5 % [revisions to previous months lately have been significantly downward so I would not take the 6.2 % to the bank]. CoreLogic HPI is used in the Federal Reserves’s Flow of Funds to calculate the values of residential real estate.
This month Corelogic reindexed – and lowered the HPI values significantly – however, there was little change to the trendlines.
Dr Frank Nothaft, chief economist for CoreLogic stated:
Low mortgage rates and a lean for-sale inventory have resulted in solid home-price growth in most markets. An expected gradual rise in interest rates and more homes offered for sale are expected to moderate appreciation in the coming year.
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Anand Nallathambi, president and CEO of CoreLogic stated:
The appreciation in home prices over the past year reflects the gathering pace of the recovery in housing in most states and regions in the U.S.. The rate recovery does vary somewhat based on local conditions. Price increases in a significant number of states in the Northeast and Mid-Atlantic regions lagged the national average with Connecticut, Maryland, Pennsylvania, West Virginia, New Jersey and Vermont registering gains of 1 percent or less over the past year.
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 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)
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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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