Lots of flex in the estimates of home price increases as we
reach the end of the year. Last week
Case-Shiller put the number (as of October) at 5.2 percent for its national
index and the week before the Federal Housing Finance Agency said, for the same
month, the gain was 6.1 percent. A third major index, one provided by Black
Knight Financial Services, was released on Monday. It put the annual increase, again for October
at 5.5 percent.
The largest price increase estimates
came from CoreLogic on Tuesday. The Home
Price Index, which we understand is the one most used by the government in its
various research functions, covered November and showed home prices up for the previous
12 month's period by 6.3 percent. On a
month over month basis the CoreLogic HPI rose 0.5 percent.
Granted we are talking a different
month than that covered by the other three indices so we went back to CoreLogic's
report for October. That too was
substantially higher than the other three - an annual increase of 6.3 percent.
The indices all involve different
methodologies and different universes, but all are intended to be
representative of price performance in the nation as a whole. Some variation is
to be expected but we find it interesting that, here we are talking (for
October), a more than a 20 percent spread.
The greatest price gains cited by
CoreLogic were all in the West. Colorado
and Washington State had, by far, the largest annual appreciation - 10.4 and
10.2 percent respectively. They were
followed by Oregon (9.0 percent), Idaho (8.5 percent), and Nevada (7.7 percent). Prices fell by 3.0 percent in Mississippi,
1.6 percent in Louisiana and 0.7 percent in New Mexico. Pennsylvania and Maryland eked out small
gains of 1.4 and 1.1 percent respectively.
The CoreLogic sees a 5.4 percent
increase in the HPI over the upcoming 12 months (November 2015 to November
2016). Prices are expected to remain
flat from November to December 2015. The
company bases its forecast using its 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.
"Heading into 2016, home price
growth remains in its sweet spot as prices have increased between 5 and 6
percent on a year-over-year basis for 16 consecutive months," said Dr.
Frank Nothaft, chief economist for CoreLogic. "Regionally we are beginning
to see fissures, with slowdowns in some Texas and California markets, but the
northwest and southeast remain on solid footing."
"Many factors, including strong
demand and tight supply in many markets, are contributing to the long-sustained
boom in prices and home equity which is a very good thing for those owning
homes," said Anand Nallathambi, president and CEO of CoreLogic. "On
the flip side, prices have outstripped incomes for several years in a number of
regions so, as we enter 2016, affordability is becoming more of a constraint on
sales in some markets."