CoreLogic HPI | Serial Overestimation

Takeaway: While the CoreLogic data continues to tell a story of accelerating HPI, another emergent trend is that of serial revisions & overestimation.

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 HPI | Serial Overestimation - Compendium 110315


Today's Focus: September CoreLogic Home Price Report


CoreLogic HPI:  Over the last year,  the CoreLogic HPI series – which has historically been the best, most real-time price series – has shown an alarming trend toward imprecision and overestimation.   


The 1st chart below shows the revisions to the Jul/Aug data.  Alongside the September release, August was revised lower by -150bps from +6.9% YoY to +5.4%. July, meanwhile, was revised lower for a second time with a revision of -70bps taking price growth down to +5.0% YoY.  Price growth in July was originally estimated at +6.9% YoY, so the collective revision of the last two months has brought that down by almost a full -200bps. 


And this revision pattern is not isolated to the September release – the serial overestimation in the original estimate followed subsequently by large-scale negative revisions has characterized the pattern every month YTD.   


The  revision is not inconsequential as it effectively (almost) changes the read-through.  Whereas the original estimate has reflected conspicuous acceleration and a positive read-through for housing related equities, the revision to flat-to-modest HPI carries a less bullish read-through for the complex.  In fact, the collective revision to July shows HPI decelerating modestly in the month and completely reverses the HPI-Equity Performance conclusion.


Further, historically, CoreLogic has been a very good lead indicator for the Case-Shiller HPI series, front-running the slope of HPI in Case-Shiller by 2-3 months. That lead indicator status has become increasingly suspect given the prevailing revision pattern. 


Inclusive of the apparent methodological flaw in the CoreLogic series, the three primary price series (CoreLogic, FHFA, Case-Shiller) continue to tell a largely congruous story of flat-to-modestly accelerating HPI.  We’re going to call CoreLogic to see if we can get some tangible underpinning for the serial overestimation in the data.  We’ll report back with anything of consequence.  



CoreLogic HPI | Serial Overestimation - HPI Revision


CoreLogic HPI | Serial Overestimation - HPI YoY   Ex Distressed TTM


CoreLogic HPI | Serial Overestimation - HPI 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

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

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more