U.S. Home Prices Have Returned to 2006 Peak
- The lowest price tier increased 9.4 percent year over year.
- Home prices forecast to rise 4.7 percent over the next year.
- Utah and Washington continued to post double-digit year-over-year gains.
National home prices increased 6.9 percent year over year in August 2017, and the index level reached the peak level last seen in April 2006. Further, an analysis of the market by price tiers indicates that lower-priced homes experienced significantly higher gains, according to the latest CoreLogic Home Price Index (HPI®) Report.
CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price. The lowest price tier increased 9.4 percent year over year, compared with 8.2 percent for the low-to-middle-price tier, 7.3 percent for the middle-to-moderate-price tier, and 5.8 percent for the high-price tier. Figure 1 shows the levels of the four price tiers indexed to January 2006, shortly before each of the tiers hit its peak index value.
The low-price tier is the only price tier to pass (by 17 percent) its pre-housing-crisis peak. The low-to-middle tier is now 0.1 percent below its peak, while the middle- to moderate-price tier remains 0.7 percent below its peak, and the high-price tier remains 0.4 percent below its peak.
The overall HPI (all price tiers combined) has increased on a year-over-year basis every month since February 2012, and as of August 2017 prices are back to the peak set in April 2006. After hitting that 2006 peak, home prices fell 33.3 percent before bottoming out in March 2011. Since then home prices have risen 49.9 percent. Home prices are expected to increase by 4.7 percent from August 2017 to August 2018. Adjusting for inflation, U.S. home prices increased 5.6 percent year over year in August 2017, and were 15.8 percent below their peak. Figure 2 shows the cumulative price movement since the inception of price declines for both the nominal HPI and the inflation-adjusted HPI and the time in years since the first decrease in the indices.
Figure 3 shows the year-over-year HPI growth for the 25 highest-appreciating states in August 2017 along with their highest and lowest historical price changes. The state of Washington showed the largest HPI gain of all states in August 2017 with a 13 percent year-over-year increase, followed by Utah’s 11.2 percent gain. Prices in 35 states (including the District of Columbia) have risen above their pre-crisis peaks, and prices in four states are no more than 5 percent below their pre-crisis peaks. Of the seven states that had larger peak-to-trough declines than the national average, only two (California and Idaho) have returned to the peak as of August 2017. Nevada home prices in August 2017 were the farthest below their all-time HPI high, still 25.6 percent below the March 2006 peak.
 The four price tiers are based on the median sale price and are as follows: homes priced at 75 percent or less of the median (low price), homes priced between 75 and 100 percent of the median (low-to-middle price), homes priced between 100 and 125 percent of the median (middle-to-moderate price) and homes priced greater than 125 percent of the median (high price).
 The Consumer Price Index (CPI) Less Shelter was used to create the inflation-adjusted HPI.
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