Home Price Gains Cooling Off Quickly
Home prices enjoyed a 27th straight month of year-over-year growth in May CoreLogic said today, but noted that those gains are no longer in the double digits. The company's Home Price Index (HPI) including distressed home sales was 8.8 percent higher than in May 2013 and rose 1.4 percent from the April level. The HPI excluding distressed sales was up 8.1 percent from one year earlier and 1.2 percent from April.
The national HPI Including distressed transactions is now 13.5 percent below its peak in April 2006. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -9.3 percent.
"The pace of home price appreciation is cooling off quickly as the weather warms up," said Mark Fleming, chief economist for CoreLogic. "May's 8.8 percent year-over-year growth rate is down almost three percentage points from just three months ago. The influences of modestly rising inventory and less-than-expected demand are causing price growth to moderate toward our forecasted expectations."
The increases were national in scope. Every state posted in increase in both HPIs in May and 25 states and the District of Columbia were within 10 percent of their pre-recession peak home price on the index including distressed sales. Ten states set new price peaks in May, Alaska, Louisiana, Oklahoma, Nebraska, Iowa, South Dakota, North Dakota, Colorado, Texas and New York. Texas and Colorado have set new peaks on almost a monthly basis since last fall.
Including distressed sales, the five states with the highest home price appreciation were: Hawaii (+13.2 percent), California (+13.1 percent), Nevada (+12.6 percent), Michigan (+11.8 percent) and New York (+11.0 percent).
Excluding distressed sales, the five states with the highest home price appreciation were: New York (+12.2 percent), Hawaii (+11.6 percent), Nevada (+10.6 percent), California (+10.4 percent) and Florida (+9.6 percent).
The CoreLogic Forecast HPI is for home prices, including distressed sales, to increase 0.8 percent month over month from May 2014 to June 2014 and, on a year-over-year basis by 6.0 percent from May 2014 to May 2015. Excluding distressed sales, home prices are expected to rise 0.7 percent month over month from and by 5.1 percent year over. CoreLogic bases its forecast on the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
"Home prices are continuing to climb across most of the country which has both positive and negative implications for the housing market," said Anand Nallathambi, president and CEO of CoreLogic. "While the rapid rise in prices over the past two years has lifted many homeowners out of negative equity, it has also become a negative factor in buying decisions for prospective purchasers weighing affordability concerns. As we move ahead, a moderation in home price increases over the next twelve months should help cool things down a bit and keep the housing recovery going."
Ninety-four of the top 100 Core Based Statistical Areas (CBSAs) measured by population showed year-over-year increases in May 2014. The six CBSAs that did not show an increase were: Worcester, Mass.-Conn.; Hartford-West Hartford-East Hartford, Conn.; New Haven-Milford, Conn.; Little Rock-North Little Rock-Conway, Ark.; Rochester, N.Y. and Winston-Salem, N.C.