U.S. Home Prices Were Heating Up Prior to the Coronavirus Outbreak

Home Price Index Highlights: February 2020

By Molly Boesel Housing Affordability, Real Estate

  • National home prices increased 4.1% year over year in February.
  • Connecticut was the only state to post an annual decline in home prices.

National home prices increased 4.1% year over year in February 2020, according to the latest CoreLogic Home Price Index (HPI®) Report. The February 2020 HPI gain was up from the February 2019 gain of 4.0%, showing that prior to the COVID-19 outbreak home prices were starting to heat up.

The HPI has increased on a year-over-year basis every month since February 2012. The HPI has gained 63.6% since hitting bottom in March 2011. As of February 2020, the overall HPI was 10.1% higher than its pre-crisis peak in April 2006, just before the start of the 2007 financial crisis. Adjusted for inflation, U.S. home prices increased 2.2% year over year in February 2020 and were 11.2% below their 2006 peak[1]. Figure 1 shows the cumulative price movement since the inception of the 2006 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.

Figure 1: HPI Price Declines From Peak

CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price[2]. The lowest price tier increased 6.0% year over year in February 2020, compared with 5.2% for the low- to middle-price tier, 4.5% for the middle- to moderate-price tier, and 3.6% for the high-price tier. Cumulative price gains since the 2011 trough were strongest for lower-priced homes, with the lowest price tier gaining 98.6%, the low- to middle-price tier gaining 78.7%, the middle- to moderate-price tier gaining 66.4% and the high-price tier gaining 49.5%. Figure 2 shows the change from a year ago and from the 2011 trough for each HPI price tier.

Figure 2: Price Growth Strongest For Lowest Priced Homes

Figure 3 shows the year-over-year HPI growth in February 2020 for the 5 highest- and lowest-appreciating states. Idaho led the states in appreciation as it has since late 2018, with annual appreciation of 11.4% this February, far above any of the other leading states. At the low end, Connecticut was the only state to see falling home prices with a 0.6% decrease from February 2019. Prices in 41 states (including the District of Columbia) have risen above their nominal pre-crisis peaks. Connecticut home prices in February 2020 were the farthest below their all-time HPI high, still 18% below the July 2006 peak.  While annual price increases slowed in 20 states compared with a year earlier, the cooling was most pronounced in Utah. Prices in Utah increased by 5.6% year over year in February 2020, a 5 percentage point slowdown from the 10.6% annual increase in February 2019.

Figure 3: States With The Highest And Lowest Year Over Year Change In HPI

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

[2] 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).