In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest CoreLogic home price data.
- CoreLogic home price data out today shows that at the national level, home prices continue to advance at a double-digit pace. From a year ago, May home prices are up 12.2 percent.
- This is the third consecutive month that CoreLogic has reported double-digit price increases from a year ago. By comparison, NAR released data nearly two weeks ago showing that May prices rose by 15.4 percent from a year ago. This was the 6th consecutive month of double-digit price gains in the NAR data.
- On the graph above, NAR and CoreLogic price data are pictured with a few other price series that reported April data last week. As you can see, the NAR data shows price increases early, but all price series have followed the trend of increases first captured in the NAR data.
- CoreLogic releases a few price measures. One index, from which we see the headline figure, includes distressed sales such as short-sales and REOs; another excludes them. Notably the CoreLogic index excluding distressed sales was up by 11.6 percent from a year ago, somewhat less than the all-encompassing index.
- NAR’s Realtors Confidence Index data may shed some light on this phenomenon. Data from a survey of members shows that the average price discount for short sales and foreclosed properties has trended down. The average discount in May was 15 percent below market for foreclosed properties and 12 percent for short-sales. Just one year ago, the average discounts for foreclosed and short-sales were 18 and 14 percent, respectively.
- With reported price gains nearing records and the memory of the housing crisis not completely forgotten, some have asked if the current pattern is sustainable. Supply constraints, pent-up demand, and economic growth all favor continued gains in home prices. Risks to that forecast come from the idea that prices cannot continue to grow faster than incomes long-term, rising mortgage rates put pressure on affordability, particularly in high-cost areas, and there are some still-lingering regulatory uncertainty in lending rules. But even these risks could become boosts to further price gains, if incomes grow faster, mortgage rates rise more gradually, and regulatory uncertainty is resolved in a manner that improves market function.
