Buying Demand & Affordability Move Home Prices Up by 6.5 Percent in June

Home prices are edging up once again thanks to pent-up buyer demand, affordability, consumer confidence, and an improving labor market.

According to CoreLogic’s June 2015 Home Price Index (HPI) report, home prices, including distressed sales, increased by 6.5 percent year-over-year in June.

“The current cycle of home price appreciation is closing in on its fourth year with no apparent end in sight,” said Anand Nallathanbi, president and CEO of CoreLogic. “Pent up buying demand and affordability together with higher consumer confidence buoyed by a more robust labor market, are a potent mix fueling a 6.5 percent jump in home prices through June with more increases likely to come.”

According to the report, excluding distressed sales, home prices increased by 6.4 percent year-over-year in June. May marks the 40th consecutive month of year-over-year price gains. Month-over-month, homes prices were up by 1.7 percent in June compared to May including distressed sales.  Excluding distressed sales, home prices were up 1.4 percent on a monthly basis in June.

Even with the increases seen in home prices nationally, they still remain 7.4 percent below their April 2006 peak, CoreLogic reports.

The CoreLogic HPI Forecast predicts that home prices will rise 0.6 percent from June 2015 to July 2015 and increase by 4.5 percent from June 2015 to June 2016.

Fifteen states and the District of Columbia reached new HPI highs including Alaska, Arkansas, Colorado, Hawaii, Iowa, Kentucky, Nebraska, New York, North Carolina, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, and Wyoming.

CoreLogic reported that four states showed negative home price appreciation: Massachusetts (-5.0 percent), Connecticut (-0.6 percent), Louisiana (-0.4 percent), and Mississippi (-0.3 percent).

“The tightness of the for-sale inventory varies across cities,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Throughout the U.S., the months’ supply was 4.8 months in the CoreLogic home-listing data for June, but varied greatly across cities. In San Jose and Denver, there was only 1.6 months’ supply of homes on the market, whereas Philadelphia had a seven months’ supply and Providence had a 6.6 months’ supply. The stronger appreciation was registered in cities with limited inventory and strong homebuyer activity, such as San Jose and Denver.”