CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 7.0 % year-over-year (reported up 0.9 % 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 downwardly revised in the following months. This month they included the following table which speaks for itself:
Home Price Change and Market Conditions for Select Metropolitan Areas
| Select Metropolitan Areas | September 2017 12-Month HPI Change Year Over Year Single-Family |
Market Condition as of September 2017 |
|---|---|---|
| Las Vegas-Henderson-Paradise NV | 9.7% | Overvalued |
| Denver-Aurora-Lakewood CO | 8.4% | Overvalued |
| Los Angeles-Long Beach-Glendale CA | 7.1% | Overvalued |
| Boston MA | 7.0% | At value |
| San Francisco-Redwood City-South San Francisco CA | 6.4% | At value |
| Miami-Miami Beach-Kendall FL | 5.5% | Overvalued |
| Washington-Arlington-Alexandria DC-VA-MD-WV | 4.6% | Overvalued |
| New York-Jersey City-White Plains NY-NJ | 4.5% | Overvalued |
| Chicago-Naperville-Arlington Heights IL | 4.0% | At value |
| Houston-The Woodlands-Sugar Land TX | 3.3% | Overvalued |
Source: CoreLogic September 2017
Dr. Frank Nothaft, chief economist for CoreLogic stated:
Heading into the fall, home price growth continues to grow at a brisk pace. This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices. The CoreLogic Single-Family Rent Index rose about 3 percent over the last year, less than half the rise in the national Home Price Index.
Frank Martell, president, and CEO of CoreLogic stated:
A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate. While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate.
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.
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)
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 here.
Source: CoreLogic
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