New data from CoreLogic shows that U.S. home prices were up significantly in the first month of 2015, though not as much as they were in most of the previous months.
Home price increases have been a double-edged sword for the U.S. real estate market, benefiting underwater borrowers or those in need of building equity in their homes, but harming those hoping to take advantage of historically low interest rates and buy a new home. In the month of January 2015, the CoreLogic Home Price Index was up by 5.7 percent year-over-year, without distressed sales taken into account. Month-over-month, the HPI was up 1.1 percent from December 2014’s figures.
With distressed sales factored in, 27 states and the District of Columbia are at or within 10 percent of their record high home price levels, with New York (+5.6 percent), Wyoming and Texas (+8.3) and Colorado (+9.1) hitting new HPI records. Without distressed sales (short sales and real estate owned transactions), all states and the District of Columbia experienced year-over-year home price increases. CoreLogic’s Home Price Index includes statistics dating back to January 1976.
Going forward, the CoreLogic HPI Forecast shows that home prices with distressed sales may increase 0.4 percent between January 2015 and February 2015, and may increase 5.3 percent year-over-year from January 2015 to January 2016. Without distressed sales, home prices may be up 0.3 percent month-over-month in February 2015, and up 4.9 percent year-over-year in January 2016. CoreLogic’s HPI Forecast is an analytic projection that utilizes the firm’s HPI combined with other economic variables, including those taken from state-level forecasts.
Home price appreciation was highest in Colorado, as the state led the way with the biggest uptick with distressed sales (+9.1 percent) and without distressed sales (+8.1 percent). Maryland (-0.3 percent) and Connecticut (-1.9 percent) were the only states with negative home price appreciation, with distressed sales factored in. Including distressed sales, January 2015’s HPI remains 12.7 percent lower than its all-time high set in April 2006. Excluding distressed sales, the gap is a bit smaller at 8.6 percent from peak-to-current.
“House price appreciation has generally been stronger in the western half of the nation and weakest in the mid-Atlantic and northeast states,” read a statement from CoreLogic chief economist Dr. Frank E. Nothaft. “In part, these trends reflect the strength of regional economies. Colorado and Texas have had stronger job creation and have seen 8 to 9 percent price gains over the past 12 months in our combined indexes. In contrast, values were flat or down in Connecticut, Delaware and Maryland in our overall index, including distressed sales.”
Talking about CoreLogic’s forecasts for the coming months, company president and CEO Anand Nallathambi said that a “strong and progressive uptick in home prices” can be expected throughout 2015 and into the coming year. “A dearth of supply in many parts of the country is a big factor driving up prices,” he added. “Many homeowners have taken advantage of low rates to refinance their homes, and until we see sustained increases in income levels and employment they are hunkered down so supplies may remain tight. Demand has picked up as low mortgage rates and the cut in FHA’s annual insurance premium reduce monthly payments for prospective homebuyers.”