National home prices increased 5.5% year over year in July 2020, according to the latest CoreLogic Home Price Index (HPI®) Report. The July 2020 HPI gain was up from the July 2019 gain of 3.4% and was the highest year-over-year gain since August 2018. Strong demand, low mortgage interest rates and low supply of for-sale homes helped push home prices higher in July.
The economic downturn that started in March 2020 is predicted to slow the HPI increase to 0.6% by July 2021, which would be the lowest increase in annual home prices since February 2012. Figure 1 shows movements in the inflation-adjusted HPI for the six most recent recessions starting from the first month and through the end of each recession. Numbers below 100 indicate falling home prices, which has been a feature of four of the six recessions. However, at five months in, the 2020 recession is following the path of the 2001 recession, which is the only other one of the six with increasing home prices. The worst of the six recessions was the Great Recession that started in 2008, which was characterized by excess supply of homes for sale, which is not the case in today’s tight-supply housing market.
CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price. Home price growth has accelerated for all four price tiers this year, with the lowest price tier showing the highest annual increase as it has since 2013. The lowest price tier increased 7.6% year over year in July 2020, compared with 6.6% for the low- to middle-price tier, 5.9% for the middle- to moderate-price tier, and 5% for the high-price tier.
Figure 3 shows the year-over-year HPI growth in July 2020 for the 5 highest- and lowest-appreciating states. All states showed annual increases in HPI in July, and Idaho led the states in appreciation as it has since late 2018, with annual appreciation of 9.8%. At the low end, New York saw an increase in home prices of 1.1%.
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 The Consumer Price Index (CPI) Less Shelter was used to create the inflation-adjusted HPI. It is important to adjust the HPI for inflation to compare recessions, especially since two of the recessions occurred during very high inflation periods.
 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).