Two days after the S&P Dow Jones/Case-Shiller home price index (HPI) reported that U.S. home prices had increased 13.7%, on average, from November 2012 to November 2013, CoreLogic released its CoreLogic/Case-Shiller HPI for the third quarter, showing that U.S. home prices had increased 11.2%, on average, compared to the third quarter of 2012.
CoreLogic, however, is careful to point out that its quarterly report differs from the S&P/Dow Jones Case-Shiller monthly report. Although both reflect findings from the same dataset, the analysis used for the CoreLogic/Case-Shiller HPI includes local-level data for a greater number of markets (380 total) over a different time frame. Additionally, the report differs from the monthly CoreLogic HPI report, which provides current data on home prices on a monthly basis.
As per the CoreLogic/Case-Shiller HPI, home prices are 17% above the fourth-quarter trough of 2011, but still 23% below the first-quarter peak of 2006.
CoreLogic forecasts that price appreciation will slow to 4.2% across all markets by the fall of this year.
‘Investor demand and sales of foreclosed properties are dropping quickly,’ says Dr. David Stiff, principal economist for CoreLogic Case-Shiller, in a release. ‘This is especially true in states that were caught up early in the bubble and have non-judicial foreclosure proceedings, such as California and Arizona. In these states, inventories of bank-owned properties are close to being cleared. Non-investor demand, although increasing, will not replace demand from investors.’
U.S cities that experienced the most rapid appreciation rates, compared to the third quarter of 2012, were Las Vegas (up 30%); Sacramento, Calif. (up 27%); and Riverside, Calif. (up 26%). Cities with the slowest appreciation rates were Philadelphia (up 3%); Hartford, Conn. (up 3%); and New Orleans (up 3%).
‘Double-digit price gains are unlikely to persist, but since housing is far more affordable now than it was in 2006, there is less concern that a new housing bubble will occur,’ Stiff says. ‘As of the third quarter of 2013, the ratio of median mortgage payment to median family income was at a 40-year low and 35 percent lower than it was at the peak of the bubble, even after accounting for recent increases in prices and mortgage interest rates.’
Cities with the larges projected year-over-year gains through the third quarter of 2014 are Oakland, Calif. (up 9%); New Orleans (up 9%); and Fort Worth, Texas (up 9%). Cities projected to have the smallest gains in home price appreciation are Nashville, Tenn. (up 2%); Orlando, Fla. (up 3%); and Jacksonville, Fla. (up 3%).