Home Price Gains Continued To Slow

from CoreLogic

-- this post authored by MOLLY BOESEL

National home prices increased 5.1 percent year over year in November 2018 and are forecast to increase 4.8 percent from November 2018 to November 2019. The November 2018 HPI gain was a slow-down from the November 2017 gain of 6.2 percent. An analysis of the market by price tiers indicates that lower-priced homes experienced significantly higher gains, according to the latest CoreLogic Home Price Index (HPI) Report.

CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price [1]. The lowest price tier increased 7.3 percent year over year, compared with 6 percent for the low- to middle-price tier, 5.4 percent for the middle- to moderate-price tier, and 4.2 percent for the high-price tier. Figure 1 shows the historical levels of the four price tiers indexed to January 2006, shortly before each of the tiers hit its peak index value. As with the overall HPI (all price tiers combined), the price tiers have seen a slowing in price appreciation ranging between 0.8 to 1.5 percentage points compared with a year ago.

The overall HPI has increased on a year-over-year basis every month since February 2012 and has gained 58 percent since hitting bottom in March 2011. As of November 2018, the overall HPI was 6.1 percent higher than its pre-crisis peak in April 2006. Adjusted for inflation, U.S. home prices increased 3.5 percent year over year in November 2018 and were 13.1 percent below their peak [2]. Figure 2 shows the cumulative price movement since the inception of price declines for both the nominal HPI and the inflation-adjusted HPI, as well as the time in years since the first decrease in the indices.

Figure 3 shows the year-over-year HPI growth in November 2018 for the 25 highest-appreciating states along with their highest and lowest historical price changes. Two states showed double-digit year-over-year increases: Nevada, up 11.1 percent, and Idaho, up 11 percent. Prices in 39 states (including the District of Columbia) have risen above their pre-crisis peaks. Of the seven states that had larger peak-to-trough declines than the national average, California, Idaho, and Michigan have surpassed their pre-crisis peaks as of November 2018. Connecticut home prices in November 2018 were the farthest below their all-time HPI high, still 16.8 percent below the July 2006 peak.

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