Home Price Increases in Second Half of 2018 Much Weaker Than in First Half

Home Price Index Highlights: December 2018

By Molly Boesel Housing Affordability, Real Estate

  • National prices increased 4.7 percent year over year in December.
  • Full year (average) 2018 appreciation was 5.8 percent.
  • Home prices forecast to rise 4.6 percent from December 2018 to December 2019 and to average 3.4 percent for the full year 2019

National home prices increased 4.7 percent year over year in December 2018 and are forecast to increase 4.6 percent from December 2018 to December 2019, according to the latest CoreLogic Home Price Index (HPI®) Report. Price appreciation averaged 5.8 percent for full year 2018, only slightly lower than the 2017 full year average of 5.9 percent. The movement in prices last year was much faster in the first half of the year, when annual price growth each month averaged 6.4 percent, than during the second half of the year, when it slowed to 5.2 percent. The full year average for 2019 is expected to be 3.4 percent.

HPI by Price Segment

CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price[1]. The lowest price tier increased 6.7 percent year over year, compared with 5.5 percent for the low- to middle-price tier, 5 percent for the middle- to moderate-price tier, and 3.8 percent for the high-price tier. Figure 1 shows the historical levels of the four price tiers indexed to January 2006, shortly before each of the tiers hit its peak index value. As with the overall HPI (all price tiers combined), the price tiers show a slowing in appreciation ranging between 1 to 1.5 percentage points from the first half of 2018 to the second half of 2018.

HPI Price Declines from Peak

The overall HPI has increased on a year-over-year basis every month since February 2012 and has gained 57.6 percent since hitting bottom in March 2011. As of December 2018, the overall HPI was 5.9 percent higher than its pre-crisis peak in April 2006. Adjusted for inflation, U.S. home prices increased 3.4 percent year over year in December 2018 and were 13.1 percent below their peak[2]. Figure 2 shows the cumulative price movement since the inception of price declines for both the nominal HPI and the inflation-adjusted HPI, as well as the time in years since the first decrease in the indices.

Year Over Year HPI Growth

Figure 3 shows the year-over-year HPI growth in December 2018 for the 25 highest-appreciating states along with their highest and lowest historical price changes. Two states showed double-digit year-over-year increases: Idaho, up 11.7 percent, and Nevada, up 10.8 percent. Prices in 39 states (including the District of Columbia) have risen above their pre-crisis peaks. Of the seven states that had larger peak-to-trough declines than the national average, California, Idaho, and Michigan have surpassed their pre-crisis peaks as of December 2018. Connecticut home prices in December 2018 were the farthest below their all-time HPI high, still 17.2 percent below the July 2006 peak. 

[1] 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).

[2] The Consumer Price Index (CPI) Less Shelter was used to create the inflation-adjusted HPI.

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