Lower-Priced Homes Had the Highest Annual Appreciation in August, but Also the Largest Slowdown in Appreciation

Home Price Index Highlights: August 2019

By Molly Boesel Housing Affordability, Real Estate

  • National home prices increased 3.6% year over year in August.
  • Only one state showed annual declines in home prices in August.

National home prices increased 3.6% year over year in August 2019 and are forecast to increase 5.8% from August 2019 to August 2020, according to the latest CoreLogic Home Price Index (HPI®) Report. The August 2019 HPI gain was down from the August 2018 gain of 5.5% and was up a bit from the July 2019 gain of 3.3%.  Home prices have been increasing year over year in a narrow range of 3.2% to 3.6% over the past six months, indicating that the rate of home price growth has plateaued.

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 5.5% year over year in August 2019, compared with 4.5% for the low- to middle-price tier, 3.9% for the middle- to moderate-price tier, and 3.2% 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),price appreciation for each price tier has slowed by 1.2 to 2.9 percentage points compared with a year earlier, with the lowest price tier showing the largest slowdown.

HPI Price Declines From Peak

The overall HPI has increased on a year-over-year basis every month for more than seven years (since February 2012) and has gained 61.9% since hitting bottom in March 2011. As of August 2019, the overall HPI was 9% higher than its pre-crisis peak in April 2006. Adjusted for inflation, U.S. home prices increased 2.6% year over year in August 2019 and were 11.4% 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 For 25 Highest-Appreciating States

Figure 3 shows the year-over-year HPI growth in August 2019 for the 25 highest-appreciating states along with their highest and lowest historical price changes. Idaho led the states in appreciation as it has for eleven consecutive months, with annual appreciation of 11.6% this August. Connecticut was the only state with home price depreciation in August, falling 0.5% year over year. Prices in 41 states (including the District of Columbia) have risen above their nominal 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 nominal pre-crisis peaks as of August 2019. Connecticut home prices in August 2019 were the farthest below their all-time HPI high, still 16.3% below the July 2006 peak.  While annual price increases slowed in 38 states compared with a year earlier, the cooling was most pronounced in California, Nevada and Washington state.

[1] The four price tiers are based on the median sale price and are as follows: homes priced at 75% or less of the median (low price), homes priced between 75% and 100% of the median (low-to-middle price), homes priced between 100% and 125% of the median (middle-to-moderate price) and homes priced greater than 125% 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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