CoreLogic revealed yesterday that home prices across the United States increased by 0.9% on a monthly basis and by 7.0% on an annual basis in October. These are exactly the same monthly and yearly increases that were recorded in September’s Home Price Index (HPI).
This was the fourth consecutive month to note a monthly increase of 0.9%. The average for the last 10 months now stands at 1.08%, while the average yearly increase amounts to 6.87%.
CoreLogic Chief Economist Dr. Frank Nothaft said: “This escalation in home prices reflects both the acute lack of supply and the strengthening economy."
The HPI has now shown annual increases every month for the past 68 months, and home prices are currently 0.9% higher than their previous peak in April 2006. After inflation, the yearly increase in October was 5.4%.
The highest yearly increase once again came from Washington with 12.5%, followed by Nevada and Utah with 10.1% each.
CoreLogic also released data for home price increases in four different price brackets ranging from low to high. Prices in the lowest bracket were 9.5% higher on a yearly basis, while in the low-to-middle bracket, they were 8.5% higher. In the middle-to-moderate bracket, prices were 7.2% higher, and they were up by 5.7% in the top price bracket.
In the lowest price bracket, home prices are now 18.2% higher than they were during the pre-recession period.
CoreLogic CEO and President Frank Martell described the increases as good news because they mean consumers have more equity, which in turn boosts consumer spending and acts as a buffer against home loan risk.
He conceded, however, that for first-time home buyers and entry-level renters, this created problems, with entry level rents for single-family residences increasing by 4.2% on an annual basis, compared to the market average of 2.7%.
Looking to the future, the CoreLogic HPI Forecast predicts a 4.2% annual increase in home prices between October this year and October 2018. On a monthly basis, home prices are projected to drop by 0.2% from October to November this year.
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