CoreLogic Index Shows Continued Increases in Home Prices

Home prices in the United States increased again in May, marking the fourth consecutive month to post a year-over-year gain, according to the latest ""CoreLogic"":http://www.corelogic.com index released Tuesday.
[IMAGE] The Santa Ana, California-based company reported that national home prices, including distressed sales, increased by 2.9 percent in May 2010 compared to May 2009. That follows an upwardly revised reading of a 3.5 percent increase from April 2009 to April 2010.

Excluding distressed sales, year-over-year prices only increased by 0.9 percent in May, while April's non-distressed index was up by only 0.4 percent. The narrower gains signal that distressed properties now are not as heavily discounted as they were a year ago and are closing the price gap between traditional, non-distressed homes.

On a month-over-month basis, CoreLogic's May index was 0.9 percent higher than April, however the rate of increase was lower than the 1.3 percent gain seen between from March to April.

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Mark Fleming, CoreLogic's chief economist, explained that home price appreciation appears to have found some stable ground as sales driven by the homebuyer tax credit peaked in late spring. But he says given that the labor market and income growth remain tepid, CoreLogic expects prices to moderate and possibly decline the rest of the year.

Based on the company's market data, the top five states with the highest appreciation in May, including distressed sales, were California (+7.9 percent), Virginia (+6.8 percent), Massachusetts (+5.7 percent), Rhode Island (+5.5 percent), and Vermont (+5.1 percent).

The states with the greatest depreciation in May included Idaho (-6.6 percent), Alabama (-5.3 percent), New Mexico (-4.2 percent), Maryland (-3.1 percent), and Wyoming (-3.1 percent).

Sixty of the top 100 Core Based Statistical Areas (CBSAs) posted price increases on a year-over-year basis in May, CoreLogic reported. The company says the number of CBSAs to return annual gains in home prices has been improving since April 2009, when all of the top 100 CBSAs had price declines.

Including distressed transactions, the peak-to-current change in CoreLogic's national home price index HPI (from April 2006 to May 2010) is -28.5 percent. Excluding distressed properties, the peak-to current differential is -20.2 percent.

CoreLogic says the recent increases in prices are being driven by lower priced homes, as well as homes that were purchased at, or shortly after, the peak and have experienced the greatest price declines in the downturn.