September 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved To 6.3%

CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 6.3 % year-over-year (reported up 1.1 % month-over-month). Last month’s 6.2 % year-over-year gain was revised downward to 5.6 %. 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 6.3 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 6.3 % was really 5.6 % (exactly what happened this month). Overall, home price trends seem to be flat (nearly unchanged) – but how long this will last due to the insufficient home inventories?

Dr. Frank Nothaft, chief economist for CoreLogic stated:

Home-equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices. Nationwide during the past year, the average gain in housing wealth was about $11,000 per homeowner, but with wide geographic variation.

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Anand Nallathambi, president and CEO of CoreLogic stated:

Home-price growth creates wealth for owners with home equity. A 5 percent rise in home values over the next year would create another $1 trillion in home-equity wealth for homeowners.

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)