Core Logic Price Data

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses Core Logic price data.

• CoreLogic data today confirm the house price trend NAR reported on last month. According to CoreLogic, house prices rose 12.1 percent from a year ago marking the 14th consecutive month of year-over-year gains in price.
• NAR data for April, released a couple weeks ago, showed a very similar trend—an 11 percent gain in house prices and the 14th month of year-over-year price gains.
• Like NAR data, CoreLogic showed the biggest gains predominantly in the West. In the all sales index, Los Angeles, Phoenix, Atlanta, and Riverside led with gains exceeding 15 percent. By state, Nevada, California, Arizona, Hawaii, and Oregon all saw gains that exceeded 15 percent.
• CoreLogic uses a repeat-sales process for producing its price index. What this means is that changes in the CoreLogic index may be more reflective of the gains that individual homeowners are seeing in the prices of their own houses as opposed to NAR’s median price which is the best reflection of current activity in the market. The two series are remarkably similar to each other and to other house price data as seen in the chart above.
• Rising prices are good for home owners who see their net worth increase as the value of what is for most their largest asset rises. Expect the Flow of Funds data from the Fed, which is released on Thursday, to show that the net worth of households has risen, in large part because of gains in the price of homes. Even if gains push the value of household real estate, pictured below, above $18 trillion, the total value of household real estate would require another 20% gain to reach the $22 trillion level seen in 2006.
• While price gains are certainly welcome for owners and sellers, what do they mean for potential buyers? This Friday (6/7), NAR will release its Housing Affordability Index that will review the impact that house price increases, mortgage rates and income have had on overall affordability. Also on Friday, government data on the unemployment rate and payroll jobs will be released ahead of the mid-June Fed meeting that will factor into the Fed’s discussion of continuing or phasing out its mortgage securities purchases.