CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 6.0 % year-over-year year-over-year (reported up 1.1 % month-over-month). Last month’s 5.7 % year-over-year gain was revised downward to 5.2 %. CoreLogic HPI is used in the Federal Reserves’s Flow of Funds to calculate the values of residential real estate.
Analyst Opinion of CoreLogic’s HPI
CoreLogic has been revising their data significantly downward in the following month – I would not take the 6.0 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 6.0% was really 5.5%. Overall, home price trends seem to be accelerating.
Dr Frank Nothaft, chief economist for CoreLogic stated:
If mortgage rates continue to remain relatively low and job growth continues, as most forecasters expect, then home purchases are likely to rise in the coming year. The increased sales will support further price appreciation, and according to the CoreLogic Home Price Index, home prices are projected to rise about 5 percent over the next year.
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Anand Nallathambi, president and CEO of CoreLogic stated:
The strongest home price gains continue to be in the western region. As evidence, the Denver, Portland and Seattle metropolitan areas all recorded double-digit appreciation 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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