Home Price Gains Slowed in May
Home prices increases decelerated slightly on an annual basis in May compared to April according to a report from CoreLogic on Tuesday. The company's Home Price Index (HPI) showed that home prices nationwide increased by 6.3 percent in May. The index, which includes sales of distressed properties, was rose 6.9 percent on an annual basis in April. It was the first month that annual appreciation has slowed since February but May still represented the 39th consecutive month for year-over-year gains.
The HPI including distressed sales rose 1.7 percent from April 2015 to May 2015 enabling ten states. (Alaska, Colorado, Iowa, Nebraska, New York, North Carolina, Oklahoma, Tennessee, Texas, and Vermont) and the District of Columbia to establish new price peaks in CoreLogic's records going back to January 1976. Another 23 states are at or within 10 percent of their old peak prices. On a national basis the peak-to-current change (from April 2006 to May 2015) was -8.4 percent.
The highest rates of annual price appreciation including distressed sales were in South Carolina (+10.3 percent), Colorado (+9.8 percent), Washington (+8.8 percent), Florida (+8.7 percent) and Nevada (+8.3 percent). Five states experienced a decline in value over the preceding year; Massachusetts (-4.8 percent), Connecticut (-1.8 percent), Maryland (-1.5 percent), Mississippi (-1.4 percent) and Louisiana (-0.8 percent).
A second HPI excluding distressed sales (REO and short sales) also rose 6.3 percent on an annual basis and was up 1.4 percent compared to the April number. Two states depreciated on an annual basis, Massachusetts was down 2 percent and Louisiana 0.2 percent. Excluding distressed transactions, the peak-to-current change was -4.7 percent.
Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 92 showed year-over-year increases. The eight CBSAs that showed year-over-year declines were: Baltimore (-1.8 percent); Boston (-4.8 percent); Bridgeport-Stamford-Norwalk (-0.32 percent); Cambridge-Newton-Framingham, MA (-2.9 percent); Camden, NJ (-0.96 percent); New Orleans (-6.4 percent); Silver Spring-Frederick-Rockville, MD (-0.31 percent) and Worcester, MA-CT (-6.6 percent).
"Mortgage rates on 30-year fixed-rate loans remained below 4 percent through May, helping to fuel home-purchase activity," said Frank Nothaft, chief economist for CoreLogic. "Our homes-for-sale listing data shows that markets with high demand and limited supply, such as San Francisco, are recording double-digit appreciation rates over the past year."
"The rate of home price appreciation ticked up in May with gains being fairly widely distributed across the country. Importantly, higher home prices over the past couple of years have spurred increases in new single-family construction," said Anand Nallathambi, president and CEO of CoreLogic. "Sales of newly built homes during the first five months of 2015 were up 23 percent from a year ago, and as rising values build equity for homeowners, we expect to see more existing homes offered for sale in the coming year."
Looking forward CoreLogic projects an 0.9 percent increase in its HPI including distressed sales from May to June 2015 and a 5.1 percent annual gain from May 2015 to May 2016. Excluding distressed sales, home prices are projected to increase by 0.8 percent on month over month basis and 4.7 percent year over year. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables.