Dive Brief:
- U.S. home prices, according to the latest CoreLogic Home Price Index (HPI), increased 1.1% between June and July and 6% since July 2015. The HPI included distressed sales.
- CoreLogic forecasted a 0.4% increase in the August HPI and a 5.4% increase by July 2017.
- When excluding distressed sales, the month-over-month rise in home sales was 1% and the year-over-year increase 5.4%. CoreLogic's predictions for future HPI without distressed sales are 4% (July to August) and 5.2% (July 2016 to July 2017).
Dive Insight:
In its HPI report, CoreLogic Chief Economist Dr. Frank Nothaft said that if the environment of low mortgage rates and employment growth continues, as the research company expects, these factors will keep driving home prices higher.
At the state level, when including distressed sales, Oregon (11.2%), Washington (10.2%), Colorado (9.3%), West Virginia (8.6%) and Utah (7.9%) scored the highest July year-over-year home price increases. West Virginia (11%), Oregon (10.7%), Washington (9.7%), Colorado (9%) and Nevada (7.2%) came out on top when excluding distressed sales. The five states with home values the furthest from their peaks were Nevada (-31.4%), Florida (-23.3%), Arizona (-22.9%), Maryland (-19.7%) and Rhode Island (-19.4%). Connecticut (-1.2%) was the only state to see a dip in home value.
While appreciation in home prices boosts seller confidence, that has proved to be a homeownership obstacle to renters and existing homeowners who are afraid of not being able to find another home. As a result, sellers are waiting for prices to go higher before they sell, pushing home prices even higher and keeping inventory low.
Factoring in the last S&P/Case-Shiller report, home price growth might be slowing a bit. The report pointed to San Francisco's home value rise of 6.4% as a sign of cooling in that high-priced market, although it's still a long way from being affordable.
