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Home price growth slows to 21-month low

CoreLogic: July gains just 7.4%

Home prices nationwide, including distressed sales, increased 7.4% in July 2014 compared to July 2013, according to the July report from CoreLogic (CLGX) – a significant slowdown that continues the long-term trend and a 21-month low.

This change represents 29 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, increased 1.2% in July 2014 compared to June 2014.

Having all-but stalled during the previous three months, the CoreLogic measure of house prices posted a decent gain in July,” said Paul Diggle, property economist with Capital Economics. “But this is probably no more than a temporary reprieve, and we expect house price growth to continue slowing over the remainder of the year.”

At the state level, including distressed sales, only Arkansas posted a decline in July 2014 with 0.9-percent depreciation. A total of 11 states, plus the District of Columbia, reached new highs in the HPI dating back to January 1976 when the index started. These states are Alaska, Colorado, Iowa, Louisiana, Nebraska, North Dakota, Oklahoma, South Dakota, Tennessee, Texas and Vermont.

“While home prices have clearly moderated nationwide since the spring, the geographic drivers of price increases are shifting,” said Sam Khater, deputy chief economist for CoreLogic. “Entering this year, price increases were led by western and southern states, but over the last few months northeastern and Midwestern states are migrating to the forefront of home price rankings.”

Excluding distressed sales, home prices nationally increased 6.8% in July 2014 compared to July 2013 and 1.1% month over month compared to June 2014. Also excluding distressed sales, all 50 states and the District of Columbia showed year-over-year home price appreciation in July. Distressed sales include short sales and real estate owned transactions.

With fewer homes being sold under distressed conditions, the influence of distressed sales on house prices – which has been a positive factor driving price inflation over the past year or so – continues to dwindle.

“The CoreLogic measure which excludes distressed sales rose by 0.7% m/m in July, more-or-less in line with the headline measure. And at 0.6%age points, the difference between the year-on-year rate of house price inflation on the headline measure and the measure which excludes distressed sales is at its lowest level in three years,” Diggle said. “We don’t think that it will be too long before distressed and non-distressed house price inflation equalizes.”

The CoreLogic HPI Forecast indicates that home prices, including distressed sales, are projected to increase 0.6% month over month from July 2014 to August 2014 and, on a year-over-year basis, by 5.7% from July 2014 to July 2015.

Excluding distressed sales, home prices are expected to rise 0.5% month over month from July 2014 to August 2014 and by 5.2% year over year from July 2014 to July 2015. The CoreLogic HPI Forecast is a monthly projection of home prices built using the CoreLogic 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.

“Home prices continued to march higher across much of the U.S. in July.  Most states are reaching price levels not seen since the boom year of 2006,” said Anand Nallathambi, president and CEO of CoreLogic. “Our data indicates that this trend will continue, with more states hitting new all-time peaks this year and into 2015 as the recovery continues.”

Other highlights from the report include:

  1. Including distressed sales, the five states with the highest home price appreciation were:  Michigan (+11.4%), Maine (+10.6%), Nevada (+10.6%), Hawaii (+10.5%) and California (+10.5%).
  2. Excluding distressed sales, the five states with the highest home price appreciation were: Massachusetts (+11.2%), New York (+9.7%), Maine (+9.5%), Hawaii (+9.2%) and Florida (+8.8%).
  3. Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to June 2014) was -11.9%. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -8.3%.
  4. The five states with the largest peak-to-current declines, including distressed transactions, were: Nevada (-36.4%), Florida (-33.0%), Arizona (-28.9%), Rhode Island (-26.9%) and New Jersey (-20.6%).
  5. Including distressed sales, the U.S. has experienced 29 consecutive months of year-over-year increases; however, the national average is no longer posting double-digit increases.
  6. Ninety-eight of the top 100 Core Based Statistical Areas (CBSAs) measured by population showed year-over-year increases in June 2014. The two CBSAs that did not show an increase were Worcester, Mass.-Conn. and Little Rock-North Little Rock-Conway, Ark.

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