A new Corelogic report reveals that, during the 12-month period ending in June 2018, the CoreLogic HPI (Home Price Index) Forecast of a 5.3 percent increase deviated only 1 percent from the 6.3 percent increase revealed in actual HPI. According to the CoreLogic HPI Forecast Validation Report, the forecast’s most accurate projections concerned the Portland-Vancouver-Hillsboro, Oregon and Washington areas. The actual HPI Index showed an increase of 6.0 percent, while the forecast projected 5.8 percent—off by only 0.2 percent. In fact, five of the major metropolitan areas forecast and analyzed maintained less than 1 percent difference from the actual increase.
The core-based statistical area (CBSA) with the greatest gap in predicted prices changes concerned the San Jose-Sunnyvale-Santa Clara, California area. Whereas the CoreLogic HPI Forecast projected a 10.2 percent increase, the actual increase was much higher, hitting 18.9 percent. This shows a deviation in projections by over 8 percentage points. San Jose has been one of the hottest markets in 2018, with home prices rising three times higher there than the national average.
Serious shortages in housing inventory and rising interest rates affected the forecast, according to CoreLogic. This tightening of the housing supply and rising interest rates are key indicators of the market volatility seen in the last year.
“The latest HPI Forecast Validation Report continues to reaffirm the accuracy of our forecasts,” said Ann Regan, a VP in Product Management with CoreLogic stated, pointing to the fact that in each of the last three validation reports issued by the firm their forecast has been within 1.7 percent of the actual HPI.
The CoreLogic HPI Forecast Validation Report compared changes in its CoreLogic HPI in June 2018 with its 12-month CoreLogic HPI Forecast. State-level forecasts consider indices based on the number of housing units per state in order and from these derive national values.