Written by Steven Hansen
CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 6.9 % year-over-year year-over-year (reported up 1.6 % month-over-month). Last month’s 7.1 % year-over-year gain was revised downward to 6.4 %. CoreLogic HPI is used in the Federal Reserves’ 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 6.9 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 6.9 % was really 6.4 % (similar to what happened this month). Overall, home price growth trends seem to be marginally trending up – likely do to the low inventory levels of homes for sale.
Dr Frank Nothaft, chief economist for CoreLogic stated:
Mortgage rates in April dipped back to their lowest level since November of last year, spurring home-buying activity. In some metro areas, there has been a bidding frenzy as multiple contracts are placed on a single home. This has led home-price growth to outpace rent gains. Nationally, home prices were up 6.9 percent over the last year, while rent growth for single-family rental homes recorded a 3 percent rise through April, according to the CoreLogic Single-Family Rental Index
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Frank Martell, president and CEO of CoreLogic stated:
Interest rates on fixed-rate mortgages are down by one-fourth of a percentage point since mid-March, just in time to support the spring home-buying season. Some metro areas have low for-sale inventory, short time-on-market trends and homes that sell above the list price. Geographically, gains were strongest in the West with Washington and Utah posting double-digit gains.
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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