Eyebrows rose when CoreLogic reported yesterday that home prices increased in May, the fourth-consecutive month to show a year-over-year increase. Virtually every other indicator from Pending Sales to Mortgage Purchase Applications is showing home sales headed south with the expiration of the homebuyer tax credit ended April 30.
According to the CoreLogic, national home prices, including distressed sales, increased by 2.9 percent in May 2010 compared to May 2009 and increased by 3.5 percent* in April 2010 compared to April 2009. The bulk of the increase, however, came from increased prices for distressed sales ? foreclosures and short sales.
Like a train slowing down to a stop, the engine driving modest increases in home prices is grinding to a halt. On a month-over-month basis, May’s prices were only 0.9 percent higher than April’s, making the rate of increase lower than the 1.3 percent gain from March 2010 to April 2010.
“Home price appreciation stabilized as homebuyer tax credit driven sales peaked in late spring,” said Mark Fleming, chief economist for CoreLogic. “But given that the labor market and income growth remain tepid we expect prices to moderate and possibly decline the rest of the year.”
April 2010 data was revised up from 2.6 percent to 3.5 percent. Revisions with public record data are standard, and to ensure accuracy CoreLogic incorporates the newly released public data to provide updated results.
Following the end of the credit, NAR’s Pending Home Sales Index dropped more in May and fell to a lower level than ever before in its10 year history. It fell 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April, and is 15.9 percent below May 2009 when it was 92.3. The falloff came on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit.