May 2017 CoreLogic Home Prices Year-Over-Year Growth Rate Now 6.6%

CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 6.6 % year-over-year (reported up 1.2 % 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.

Dr Frank Nothaft, chief economist for CoreLogic stated:

The market remained robust with home sales and prices continuing to increase steadily in May. While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1 percent on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment (defined as properties with rents less than 75 percent of the regional median rent) increased 4.7 percent over the same time, well above the pace of overall inflation.

Frank Martell, president and CEO of CoreLogic stated:

For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending. For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.

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)

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.