Tuesday, August 13, 2013

CoreLogic: Rapid Rise in Home Prices 'Remarkable'

This just in from the National Association of Realtors®


During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable."

In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.

The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.

Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.

Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.

The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
  • Nevada: +26.5%
  • California: +21.4%
  • Wyoming: +16.7%
  • Arizona: +16.2%
  • Georgia: +14.3%

Source: “Home Prices Rising at Fastest Pace in 36 Years,” Mortgage News Daily (Aug. 6, 2013) and “Home prices rise again, but at a slower pace,” USA Today (Aug. 6, 2013)

Rod's two cents: I think we will continue to enjoy a robust and healthy appreciation over the next 12-18 months.  I don't think it will continue at these break neck speeds, however. Interest rate volatility and a slow surge in new resale inventory as homeowners right the ship financially will balance things back to a healthy but modest rate of growth in the middle single digits.

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