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CoreLogic: As Summer Heats Up, Prices Cool Off

CoreLogic: As Summer Heats Up, Prices Cool Off

Now that the spring buying season is ending, price increases will chill for the balance of the year.  Yet they will continue to rise next year, but at a slower rate, about  6 percent year over year rather than the 8.1 percent increase reached in May.

That’s what CoreLogic’s forecast looks like.  The CoreLogic HPI Forecast indicates that home prices, including distressed sales, are projected to increase 0.8 percent month over month from May 2014 to June 2014 and, on a year-over-year basis by 6.0 percent (+/- 1.5 percent)** from May 2014 to May 2015. Excluding distressed sales, home prices are expected to rise 0.7 percent month over month from May 2014 to June 2014 and by 5.1 percent (+/- 1.5 percent)** year over year from May 2014 to May 2015. The CoreLogic HPI Forecast is a monthly projection of home prices built on 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.

Last month, excluding distressed sales, home prices nationally increased compared to May 2013 and 1.2 percent month over month compared to April 2014.

“The pace of home price appreciation is cooling off quickly as the weather warms up,” said Mark Fleming, chief economist for CoreLogic. “May’s 8.8 percent year-over-year growth rate is down almost three percentage points from just three months ago. The influences of modestly rising inventory and less-than-expected demand are causing price growth to moderate toward our forecasted expectations.”

“Home prices are continuing to climb across most of the country which has both positive and negative implications for the housing market,” said Anand Nallathambi, president and CEO of CoreLogic. “While the rapid rise in prices over the past two years has lifted many homeowners out of negative equity, it has also become a negative factor in buying decisions for prospective purchasers weighing affordability concerns. As we move ahead, a moderation in home price increases over the next twelve months should help cool things down a bit and keep the housing recovery going.”

Highlights as of May 2014:

Including distressed sales, the five states with the highest home price appreciation were:  Hawaii (+13.2 percent), California (+13.1 percent), Nevada (+12.6 percent), Michigan (+11.8 percent) and New York (+11.0 percent).

Excluding distressed sales, the five states with the highest home price appreciation were: New York (+12.2 percent), Hawaii (+11.6 percent), Nevada (+10.6 percent), California (+10.4 percent) and Florida (+9.6 percent).

Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to May 2014) was -13.5 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -9.3 percent.

Including distressed sales, the U.S. has experienced 27 consecutive months of year-over-year increases; however, the national average is no longer posting double-digit increases.

The five states with the largest peak-to-current declines, including distressed transactions, were: Nevada (-38.1 percent), Florida (-34.3 percent), Arizona (-29.2 percent), Rhode Island (-28.7 percent) and New Jersey (-23.0 percent).

Ninety-four of the top 100 Core Based Statistical Areas (CBSAs) measured by population showed year-over-year increases in May 2014. The six CBSAs that did not show an increase were: Worcester, Mass.-Conn.; Hartford-West Hartford-East Hartford, Conn.; New Haven-Milford, Conn.; Little Rock-North Little Rock-Conway, Ark.; Rochester, N.Y. and Winston-Salem, N.C.

*April data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.

** The forecast accuracy represents a 95-percent statistical confidence interval.

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