CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 6.4 % year-over-year, year-over-year (reported up 0.6% month-over-month). There is considerable backward revision in this index which makes monthly reporting problematic. CoreLogic HPI is used in the Federal Reserves’s Flow of Funds to calculate the values of residential real estate.

Sam Khater, deputy chief economist for CoreLogic stated:

After nearly 10 years of very high home price volatility, home price increases have been remarkably stable for the last 15 months, ranging between a 4.8 percent and 6.5 percent year-over-year increase. Home price volatility is now back to the long-term trend prior to the boom and bust which is a good barometer of the market’s stability and health.

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Anand Nallathambi, president and CEO of CoreLogic stated:

The continued growth in home prices is welcome news for many homeowners but more markets are becoming overvalued. In the near term, this trend is likely to continue and pose evaluated risks to the housing economy. More has to be done to expand inventories if we are going to address the emerging affordability crisis, especially in hot markets like California and Colorado.

Comparison of Home Price Indices – Case-Shiller 3 Month Average (blue line, left axis), CoreLogic (green line, left axis) and National Association of Realtors (red line, right axis)

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The way to understand the dynamics of home prices is to watch the direction of the rate of change – and not necessarily whether the prices are getting better or worse. Home prices are improving – and the rate of growth is now marginally improving after almost a year of declining growth rate.

Year-over-Year Price Change Home Price Indices – Case-Shiller 3 Month Average (blue bar), CoreLogic (yellow bar) and National Association of Realtors (red bar)

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Caveats Relating to Home Price Indices

There is no such thing as an “accurate” home price index. CoreLogic HPI is a repeat sales type index which should not be skewed by changes in the mix of home sales. For more information, please read here.