by Calculated Risk on 7/13/2010 01:10:00 PM

From CoreLogic (formerly First American LoanPerformance): CoreLogic® Home Price Index Shows Continued Increases in Home Prices for both Year-Over-Year and Month-Over-Month Figures In May

National home prices in the U.S. increased in May, the fourth-consecutive month showing a year-over-year increase. According to the CoreLogic HPI, national home prices, including distressed sales, increased by 2.9 percent in May 2010 compared to May 2009 and increased by 3.5 percent in April 2010 compared to April 2009. Excluding distressed sales, year-over-year prices only increased by 0.9 percent in May, and April’s non-distressed HPI increased by 0.4 percent.

On a month-over-month basis, May’s HPI was 0.9 percent higher than the April 2010 HPI, but the rate of increase was lower than the 1.3 percent gain from March 2010 to April 2010.
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“Home price appreciation stabilized as homebuyer tax credit driven sales peaked in late spring,” said Mark Fleming, chief economist for CoreLogic. “But given that the labor market and income growth remain tepid we expect prices to moderate and possibly decline the rest of the year.”

Click on graph for larger image in new window.

This graph shows the national LoanPerformance data since 1976. January 2000 = 100.

The index is up 2.9% over the last year, and off 28.5% from the peak.

CoreLogic expects prices to "moderate and possibly decline". I expect that we will see lower prices on this index later this year.

The second graph is an update on the price-to-rent ratio similar to the approach used by Fed economist John Krainer and researcher Chishen Wei in 2004: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

This graph shows the price to rent ratio using the CoreLogic data (January 2000 = 1.0).

This suggests that house prices are much closer to the bottom than the top, but that prices still have a ways to fall on a national basis.

I think this index will show a further price increase in June, as tax credit related existing home sales close. But I expect the index will show declines by the end of summer and into the fall.