Hottest Home Price Appreciation Prior to Spring Selling Season in 9 Years

Home prices including distressed sales increased again in February on both a monthly and an annual basis CoreLogic said on Tuesday.  Its nationwide Home Price Index (HPI) rose by 1.1 percent in February compared to the previous month and was 5.6 percent higher than in February 2014.  The latter number marks three full years of consecutive annual price increases.

"Since the second half of 2014, the dwindling supply of affordable inventory has led to stabilization in home price growth with a particular uptick in low-end home price growth over the last few months," said Dr. Frank Nothaft, chief economist for CoreLogic. "From February 2014 to February 2015, low-end home prices increased by 9.3 percent compared to 4.8 percent for high-end home prices, a gap that is three times the average historical difference."

Connecticut with a -0.9 percent change in its HPI was the only state that did not post an annual increase.  The best performers on the HPI including distressed sales were Colorado (+9.8 percent), South Carolina (+9.3), Michigan (+8.5 percent), Texas (+8.5 percent) and Wyoming (+8.4 percent). 

Twenty six states and the District of Columbia were at or within 10 percent of their price peaks in February and six states, Colorado (+9.8 percent), New York (+8.2 percent), North Dakota (+7.7 percent), Texas (+8.5 percent), Wyoming (+8.4 percent) and Oklahoma (+5.2 percent), reached the highest prices in CoreLogic's HPI history which dates back to January 1976.  The five states with the largest peak-to-current declines, including distressed transactions, were: Nevada (-35.4 percent), Florida (-32.4 percent), Rhode Island (-29.6 percent), Arizona (-28.4 percent) and Connecticut (-24.7 percent).

On the HPI which excludes distressed sales home prices increased by 5.8 percent in February 2015 compared to February 2014 and by 1.5 percent month over month. Every state and the District of Columbia showed year-over-year home price appreciation in February.  The five states with the highest price appreciation on this index were: South Carolina (+9.7 percent), New York (+9.2 percent), Colorado (+9 percent), Texas (+7.9 percent) and Florida (+7.8 percent).

CoreLogic forecasts that its HPI including distressed sales will increase by 0.6 percent from February 2015 to March 2015 and will post an annual increase of 5.1 percent from February 2015 to February 2016.  Excluding distressed sales home prices are projected to increase by 0.5 percent on a monthly basis and 4.8 percent for the year.  The CoreLogic HPI Forecast is a projection of home prices using 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.

"This is the hottest home price appreciation prior to the spring selling season in nine years," said Anand Nallathambi, president and CEO of CoreLogic. "Assuming a benign interest rate environment and continued strong consumer confidence, we expect home prices to rise by an additional five percent over the next twelve months."

Ninety-two of the top 100 Core Based Statistical Areas (CBSAs) measured by population showed year-over-year increases in January 2015. The eight CBSAs that declined were: Baltimore-Columbia-Towson; Philadelphia; Hartford-West Hartford-East Hartford; New Orleans-Metairie; Rochester, New York; Worcester, Massachusetts, Albany-Schenectady-Troy; and New Haven-Milford, Connecticut.