CoreLogic® has released its latest CoreLogic HPI Forecast Validation Report that compares its 12-month CoreLogic Home Price Index (HPI) Forecast to the actual CoreLogic Home Price Index. The report compares the changes in national and key metro-level forecasts made in June 2018 to the actual HPI index, which includes data through June 2019.
The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. National values are derived from state-level forecasts by weighing indices according to the number of housing units for each state. Published every six months, the Forecast Validation Report is designed to provide transparency into CoreLogic forecasting abilities.
The report showed:
Sixteen large metros had forecasts with less than a 1 percent difference from actual values, including the Phoenix, Houston and Milwaukee metros all coming in within 0.3 percent. The top 10 major metros all had forecasts within 0.5 percent of actual values.
The national forecast prediction of a 5.7 percent increase was within 2.4 percent of the 3.3 percent increase of the HPI for the 12-month period ending in June 2019. Long-term affordability concerns, coupled with consumer sentiment about the general economic climate along with other economic factors, caused actual home prices to increase at a slower rate.
The most accurate metro-level forecast was for the Phoenix-Mesa-Scottsdale, Ariz., area, which at 5.9 percent came on target of the actual HPI increase of 5.9 percent.
The widest metro gap was in the San Jose, Calif., metro areas, with a 13 percent over-estimation of actual increase. CoreLogic noted that the variance in this under-valued metro was mainly due to a concern over long-term affordability.
Severe inventory shortages and rising interest rates impacted the forecasts of several metros—including the Chicago and San Francisco areas—reflecting the overall market volatility of the past 12 months.
Slowing home price appreciation across many markets over the last 12 months caused much more volatility in housing markets than has been observed over the last three years.
“The latest HPI Forecast Validation report continues to demonstrate why CoreLogic is the gold standard when it comes to home price forecasting,” says Ann Regan, executive, Product Management for CoreLogic. “While our national forecast results reflect the difficulties of forecasting in an extremely volatile market, our forecasts were still able to provide accurate, region-specific forecasts for major metro areas, providing HPI clients with the reliability they need in the current market.”