HPI for Largest Metro Areas: Growth Continues, But at a Slower Pace

Economic Observations March 2019

By Molly Boesel Housing Affordability, Real Estate

CoreLogic Home Price Index appreciation slowed in recent months, with annual appreciation of 4.4 percent in January 2019 compared with 6.1 percent in January 2018. This slowdown in home price growth comes after stellar appreciation when prices started increasing again after the housing market crash. (Figure 1) Drilling down into the price changes of the largest 50 metropolitan areas shows that some metros stand out as extremes, and some run counter to the National trends.

After Seven Stellar Years

Among the 50 largest metros, Philadelphia and Las Vegas stand apart with double-digit annual appreciation, each growing by 10.5 percent in January. San Francisco had the lowest year-over-year appreciation in January, increasing by just 1.6 percent, followed by Baltimore with appreciation of 1.7 percent. (Figure 2) The last time any of the 50 largest metros showed a year-over-year decrease in home prices was in April 2015, when Baltimore showed a dip of 0.3 percent.

Home Price Appreciation in Some Metros Stands Out

National home prices through January were 6 percent above the pre-crisis peak hit in April 2006 and two-thirds of the 50 largest metros now have prices at or above their pre-housing-crisis peaks. While the 17 metros that have yet to regain home price losses are dispersed across the U.S., six of them are located in Florida. Of these 17, the metro closest to the prior peak was Providence, Rhode Island, at 3.7 percent away from its October 2005 peak. Even with the large annual gains in HPI, Las Vegas remains the metro furthest below peak, having 17.5 percent more to gain before getting back to the March 2006 peak.

Only nine of the 50 largest metros bucked the appreciation slow down trend, with Philadelphia showing the largest acceleration in home price growth. Philadelphia year-over-year home price increases in January 2018 were just 5.2 percent compared with 10.5 percent in January 2019.

Nine of the 10 Largest Slowdowns

The rest of the largest metros followed the national slowdown trend. Nine of the 10 markets with the biggest slowdown were in the West. (Figure 3) San Jose led the pack slowing from appreciation of 16.2 percent in January 2018 to just 2.4 percent this January. Seattle also showed a double-digit slowdown, slowing from 13.4 percent growth in January 2018 to 2.8 percent growth in January 2019.

What does the future hold for home price growth? The CoreLogic HPI forecast predicts home price appreciation will continue to slow, with National appreciation over the next 12 months averaging 3.2 percent.

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