CoreLogic | Would the Real HPI Please Stand Up

Takeaway: CoreLogic again shows dramatic acceleration in HPI in July. Our enthusiasm is tempered only slightly by the trend toward downward revisions.

Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume. 

 

CoreLogic | Would the Real HPI Please Stand Up - Compendium 090115

 

Today's Focus: July CoreLogic Home Price Report

 

CoreLogic HPI:  Home prices rose +1.7% month-over-month in July with year-over-year growth accelerating +130 bps sequentially to +6.9% - marking a 5th month of acceleration off the Feb ’15 RoC trough.   Prices lag demand trends by ~12 months and rising TTM demand along with the prevailing tight supply environment argue for further acceleration in HPI over the nearer-term.  

 

Revisions: Magnitude, Not Direction:  Downward revisions to prior month estimates have been serial in the CoreLogic HPI series over the last ~12+ months.  The August release continued that trend as the rate of change in HPI was revised lower by -30bps and -90bps in May and June, respectively (see 1st chart below). 

 

In short, the recurrent trend in CoreLogic estimates has been this: 

 

Initial estimates show a remarkable sequential acceleration in HPI ---> Subsequent downward revisions reflect only a modest acceleration ---> the direction of the 2nd derivative trend remains intact upon final revision but the magnitude of RoC improvement is significantly more muted than original estimates.

 

Given the prevailing trend, it’s likely the July figures see another downward revision while leaving the larger trend towards accelerating price growth in tact.  The larger trend towards acceleration is the key takeaway as rising price growth supports higher ASP’s, builder margin expansion, and positive equity performance across the housing complex.    

 

Further, it’s likely the trend across all three primary price series (CoreLogic, FHFA, Case-Shiller) becomes more congruent as the price trend matures.  Specifically, we’d expect the Case-Shiller series - which is the most lagging and currently reflecting flat price growth – to play catch-up to the CoreLogic data on a lag and as the trend becomes more firmly entrenched.  Historically, as can be seen in the 2nd chart below, the catch-up and overshoot dynamic has been typical of the Case-Shiller data over the last two decades. 

 

 

CoreLogic | Would the Real HPI Please Stand Up - CoreLogic July   June Revision

 

CoreLogic | Would the Real HPI Please Stand Up - CoreLogic vs CS LT

 

CoreLogic | Would the Real HPI Please Stand Up - Corelogic YoY TTM

 

CoreLogic | Would the Real HPI Please Stand Up - Corelogic Ex Distressed YoY TTM

 

 

 

 

About CoreLogic:

CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic's property information database. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate constant-quality view of pricing trends than basing analysis on all home sales. The CoreLogic HPI covers 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all 50 states and the District of Columbia."

 

Joshua Steiner, CFA

 

Christian B. Drake


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more