Home Prices Ignoring Predictions

For some timernconventional wisdom has held that home price increases are slowing and wouldrncontinue to do so, but the CoreLogic Home Price Index (HPI) has joined thernS&P Dow Jones Case-Shiller Index in belying that prediction.  Its HPI has now posted larger year-over-yearrnincrease in prices every month but one since the beginning of 2015.   </p

The HPI whichrnincludes distressed sales increased by 6.8 percent in April 2015 compared to Aprilrn2014.  In March that increase was 5.9rnpercent, in February 5.6 percent, and in January 5.7 percent.   ThernApril number represents 38 months of annual increases nationally. </p

On a month-over-monthrnbasis the index jumped 2.7 percent.  Itrnhad risen 2.0 percent in March and was up 1.1 percent in each of the precedingrntwo months.  CoreLogic had forecast a 0.8rnpercent gain.</p

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Including distressed sales, 30 statesrnplus the District of Columbia were at or within 10 percent of their peak pricesrnin April. Eight states, Alaska, Colorado, Nebraska, New York, Oklahoma,rnTennessee, Texas and Wyoming, and the District of Columbia reached the highestrnindex levels since CoreLogic began collecting data in January 1976.  </p

The five states with the highest annualrnhome price appreciation were: South Carolina (+11.4 percent), Colorado (+9.7rnpercent), Washington (+9.1 percent), Florida (+9 percent) and Texas (+8.3rnpercent).  Including distressed sales,rnfour states experienced year-over-year home price depreciation: Massachusettsrn(-1.7 percent), Louisiana (-1.5 percent), Connecticut (-1.1 percent) andrnMaryland (-0.7 percent).</p

Excluding distressed sales (short salesrnand sales of REO), home prices increased by 6.8 percent in April 2015 comparedrnwith April 2014 and increased by 2.3 percent from March (the forecast was 0.7rnpercent).  The five states with thernhighest home price appreciation were: South Carolina (+10 percent), Floridarn(+9.5 percent), Colorado (+9.3 percent), Washington (+8.7 percent) and Texasrn(+8.2 percent). Two states, South Dakota and Louisiana, depreciated by arnfraction of a percent year-over-year. </p

“For the first four months ofrn2015, home sales were up 9 percent compared to the same period a yearrnago,” said Frank Nothaft, chief economist for CoreLogic. “Onernbyproduct of the increased sales activity is rising house prices, and, as arnresult, month-over-month home prices are up almost 3 percent for April 2015 andrnup more than 6 percent from a year ago.”</p

Including distressed transactions, thernpeak-to-current change in the national HPI (from April 2006 to April 2015) wasrn-9 percent. Excluding distressed transactions, the peak-to-current change forrnthe same period was -5.1 percent.</p

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CoreLogic forecasts that home prices,rnincluding distressed sales will increase by 1.1 percent month over month fromrnApril 2015 to May 2015 and by 5.3 percent on a year-over-year basis from Aprilrn2015 to April 2016.  Excluding distressedrnsales, home prices are projected to increase by 0.9 percent month over monthrnfrom April 2015 to May 2015 and by 4.9 percent on a going-forward annual basis.rn The CoreLogic HPI Forecast is arnprojection of home prices using the CoreLogic HPI and other economic variables.rn</p

“Old fashion supply and demand,rnfueled by historically low mortgage rates and improving consumer finances andrnconfidence, continue to push home prices up,” said Anand Nallathambi,rnpresident and CEO of CoreLogic. “We expect continued price appreciation</bthroughout 2015 and into next year. Over the longer term, household formation,rnup by more than one million over the past year alone, will drive down vacancyrnrates and create tighter housing markets in many metropolitan areas. Thisrnshould provide the necessary underpinning for rising prices for the foreseeablernfuture."</p