CoreLogic: US Annual Home Price Growth Drops to the Lowest Rate in 11 Years in May

• Annual appreciation continues to relax but is projected to start regaining steam later in 2023
• Eleven states and one district posted annual home price losses in May, with much of the depreciation recorded in the West

CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, today released the CoreLogic Home Price Index (HPI^™) and HPI Forecast^™ for May 2023.

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Figure 1: HPI & HPI Forecast Percentage Change YOY

Annual U.S. single-family home price growth slowed for the 12th straight month in May, falling to a 1.4% increase year over year. The last time CoreLogic’s Home Price index saw annual growth fall to less than 2% was in early 2012, but U.S. appreciation still remained positive for the 136th straight month in May.

Following recent trends, a significant number of Western states saw prices decline in May from the same time in 2022, reflecting out-migration from less-urban locations where people moved during the height of the pandemic and the significant loss of affordability due to those resulting home price surges. Northeastern states and Southeastern metro areas continue to see larger home price gains compared with other areas of the country, due to both workers slowly moving back to job centers in some areas of the country and settling in relatively affordable places in others.

“After peaking in the spring of 2022, annual home price deceleration continued in May,” said Selma Hepp, chief economist at CoreLogic. “Despite slowing year-over-year price growth, the recent momentum in monthly price gains continues in the face of recent mortgage rates increases.”

“Nevertheless, following a cumulative increase of almost 4% in home prices between February and April of 2023, “Hepp continued, “elevated mortgage rates and high home prices are putting pressure on potential buyers. These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average, with a 0.9% increase from April to May.”

Top Takeaways:

• U.S. home prices (including distressed sales) increased by 1.4% year over year in May 2023 compared with May 2022. On a month-over-month basis, home prices increased by 0.9% compared with April 2023.
• In May, the annual appreciation of attached properties (2.7%) was 1.7 percentage points higher than that of detached properties (1%).
• CoreLogic forecasts show annual U.S. home price gains increasing to 4.5% by May 2024.
• Miami again posted the highest year-over-year home price increase of the country's 20 tracked metro areas in May, at 11.8%. Atlanta and Charlotte, North Carolina saw the next-highest gains, both at 4.4%.
• Among states, Maine, ranked first for annual appreciation in May (up by 7.2%), followed by New Jersey (up by 7.1%) and Indiana (up by 6.9%). Eleven states and one district recorded annual home price losses: Idaho (-8%), Washington (-7.5%), Nevada (-5.6%), Montana (-5.3%), Utah (-4.3%), Arizona (-4.2%), California (-3.5%), Oregon (-3.1%), Colorado (-2.7%), South Dakota (-1.3%), New York (-0.3%) and the District of Columbia (-0.1%).

The next CoreLogic HPI press release, featuring May 2023 data, will be issued on August 1, 2023, at 8 a.m. EST.

Methodology

The CoreLogic HPI^™ is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 45 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the CoreLogic HPI is designed to provide an early indication of home price trends by market segment and for the Single-Family Combined tier, representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties. The indices are fully revised with each release and employ techniques to signal turning points sooner. The CoreLogic HPI provides measures for multiple market segments, referred to as tiers, based on property type, price, time between sales, loan type (conforming vs. non-conforming) and distressed sales. Broad national coverage is available from the national level down to ZIP Code, including non-disclosure states.

CoreLogic HPI Forecasts^™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, CoreLogic HPI Forecasts project CoreLogic HPI levels for two tiers — Single-Family Combined (both attached and detached) and Single-Family Combined Excluding Distressed Sales. As a companion to the CoreLogic HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, adverse and severely adverse scenarios at state, metropolitan areas and ZIP Code levels. The forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index.

About Market Risk Indicators

Market Risk Indicators are a subscription-based analytics solution that provide monthly updates on the overall health of housing markets across the country. CoreLogic data scientists combine world-class analytics with detailed economic and housing data to help determine the likelihood of a housing bubble burst in 392 major metros and all 50 states. Market Risk Indicators is a multi-phase regression model that provides a probability score (from 1 to 100) on the likelihood of two scenarios per metro: a >10% price reduction and a ≤ 10% price reduction. The higher the score, the higher the risk of a price reduction.

About the Market Condition Indicators

As part of the CoreLogic HPI and HPI Forecasts offerings, Market Condition Indicators are available for all metropolitan areas and identify individual markets as overvalued, at value or undervalued. These indicators are derived from the long-term fundamental values, which are a function of real disposable income per capita. Markets are labeled as overvalued if the current home price indexes exceed their long-term values by greater than 10% and undervalued where the long-term values exceed the index levels by greater than 10%.

Source: CoreLogic

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About CoreLogic

CoreLogic is a leading global property information, analytics and data-enabled solutions provider. The company's combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.

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