For validation purposes, CoreLogic is now publicly comparing the forecasts in it home price index (HPI) report with the actual HPI increase.
For the 12-month period ended June 2017, the firm forecast that U.S. home prices would, on average, increase 5.4%. However, the actual HPI increase was 6.1%, according to CoreLogic’s new HPI Forecast Validation Report, which will be published twice a year. The first installment of the report was released this week.
In terms of forecasting home prices in major metropolitan areas, CoreLogic was most accurate in its forecast for the Phoenix-Mesa-Scottsdale, Ariz. area. For the 12 months ended in June, that area saw home prices increase 6.2%, on average. CoreLogic had forecast an increase of 6.6%. As such, the firm’s forecast came within 0.4% of the actual HPI increase.
The firm’s forecast saw the widest disparity in the Seattle-Bellevue-Everett, Wash., area. For that area, CoreLogic had forecast a 5.9% increase in home prices, on average, but the actual HPI increase was 14.3% – a difference of 8.4%.
CoreLogic says the variance in this “over-valued” area was “due to unexpected acceleration in prices in early 2017 after a price deceleration earlier in 2016.”
“Our clients leverage the CoreLogic HPI Forecasts to price portfolios, conduct stress testing, allocate cash reserves and conduct a host of other critical business functions,” says Frank Nothaft, chief economist for CoreLogic. “With the introduction of the biannual HPI Forecast Validation Report, users can now get specific insight into the degree of accuracy of our HPI forecasts at the national and [city] levels.”