Written by Steven Hansen
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). 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 year-over-year rate of growth has been steady for three years – with a higher number issued initially and later significantly downwardly revised in the following months. Last month it was 7.0 % year-over-year also – which was revised down to 6.4 %. This likely will be reduced further in the coming months – and will end up near 6 % growth.
Dr Frank Nothaft, chief economist for CoreLogic stated:
Rising home prices are good news for home sellers, but add to the challenges that home buyers face. Growing numbers of first-time buyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for ‘starter’ homes and further erosion of affordability.
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Frank Martell, president and CEO of CoreLogic stated:
Without a significant surge in new building and affordable housing stock, the relatively high level of growth in home prices of recent years will continue in most markets. Although policymakers are increasingly looking for ways to address the lack of affordable housing, much more needs to be done soon to see a significant improvement over the medium term.
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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