February 2017 CoreLogic Home Prices Year-over-Year Growth Rate Now 7.0%.

CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 7.0 % year-over-year year-over-year (reported up 1.0 % month-over-month). Last month’s 6.9 % year-over-year gain was revised downward to 6.2 %. CoreLogic HPI is used in the Federal Reserves’ Flow of Funds to calculate the values of residential real estate.

Dr Frank Nothaft, chief economist for CoreLogic stated:

Home prices and rents have risen the most in local markets with high demand and limited supply, such as Seattle, Portland and Denver. The rise in housing costs has been largest for lower-tier-priced homes. For example, from December to February in Seattle, the CoreLogic Home Price Index rose 12 percent and our single-family rent index rose 6 percent for all price tiers compared with the same period a year earlier. However, when looking at only lower-cost homes in Seattle, the price increase was 13 percent and the rent increase was 7 percent.

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Frank Martell, president and CEO of CoreLogic stated:

Home prices continue to grow at a torrid pace so far in 2017 and these gains are likely to continue well into the future. Home prices are at peak levels in many major markets and the appreciation is being driven by a number of dynamics—high demand, stronger employment, lean supplies and affordability—that will continue to play out in the coming years. The CoreLogic Home Price Index is projecting an additional 5 percent rise in home prices nationally over the next 12 months.

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

Steven Hansen

Source: CoreLogic

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