Maybe Home Price Gains Aren't Decelerating After All

Home price increases continued to exceed CoreLogic's own projections in July.  The company's Home Price Index (HPI) indicates that home prices nationwide, including distressed sales, rose 1.1 percent from June and were 6 percent higher than in July 2015.  The month-over-month gain was identical to the rate of appreciation from May to June, but the year-over-year increase marked an acceleration from the 5.7 percent reported in June.  In the last HPI, CoreLogic noted a deceleration in price gains.

Oregon and Washington continue to top the charts with double digit annual increases of 11.2 and 10.2 percent respectively.  They were followed by Colorado at 9.3 percent, West Virginia (8.6 percent) and Utah (7.9 percent.)  Only one state failed to post an annual gain; Connecticut, where prices fell by 1.2 percent.  Other states had negligible changes; New Jersey saw appreciation of only 0.2 percent and in Vermont the gain was 0.8 percent.

"The strongest home price gains continue to be in the western region," said Anand Nallathambi, president and CEO of CoreLogic. "As evidence, the Denver, Portland and Seattle metropolitan areas all recorded double-digit appreciation over the past year."

CoreLogic is forecasting an increase in its HPI of 5.4 percent over the next 12 months (to July 2017) and a 0.4 percent uptick from July to August.  The company's 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. In the first six months of 2016 CoreLogic has projected monthly gains averaging 0.68 percent while reporting actual increases with a mean of 1.46 percent. CoreLogic had projected a June to July gain of 0.6 percent.

"If mortgage rates continue to remain relatively low and job growth continues, as most forecasters expect, then home purchases are likely to rise in the coming year," said Dr. Frank Nothaft, chief economist for CoreLogic. "The increased sales will support further price appreciation, and according to the CoreLogic Home Price Index, home prices are projected to rise about 5 percent over the next year."