Is CoreLogic Being CoreLogical? A Look at Their Home Price Predictions

It’s always interesting to look at how CoreLogic predicts home price growth, and I agree—it’s no easy task. In their short-term forecasts, they often show a pattern of underestimating price growth in the first half of the year and overestimating it in the second. This could be due to the seasonal fluctuations in housing markets, or perhaps a response to unexpected economic changes.

Their longer-term predictions, though, seem to fare worse. For instance, January 2023 saw them forecasting 3.0% home price growth for the year, but the reality was 6.1%—a significant miss. Predicting 12 months into the future is always difficult, particularly with factors like interest rates, inventory levels, and market sentiment influencing the outcome.

Why CoreLogic's Current Forecast May Be Low

Looking at CoreLogic’s forecast of just 2.2% home price growth from July 2024 to July 2025, I share your skepticism. Several factors suggest that this prediction might indeed be conservative:

1. Mortgage rates have fallen by 2% over the last four months. Lower rates typically make homes more affordable, encouraging buyer activity, which could drive up prices.
2. Inventory remains low. National inventory is 28% below pre-pandemic levels, which means less supply and more competition for the available homes. Basic economics tells us that lower supply usually results in higher prices.
3. We’ve had two years of sluggish home sales, with annual sales of existing homes stuck around 4 million units. The market may be overdue for a rebound, particularly as rates ease.

A Possible Market Turnaround

While CoreLogic points to flat price growth during the summer, it’s important to remember that we’re heading into a slower season.

Historically, fall and winter months see reduced buyer activity. However, if mortgage rates continue to decline—especially if the Federal Reserve cuts rates further—we might see a boost in demand that drives home prices higher than their forecast.

Additionally, economic uncertainties like a potential cooling labor market and the lead-up to the 2024 presidential election could affect buyer behavior. Lower mortgage rates could offset some of these concerns, but buyers may remain cautious until more clarity emerges.

Bottom Line

While CoreLogic’s Chief Economist Dr. Selma Hepp highlights potential reasons for their conservative forecast, I’d argue that the conditions are ripe for more growth than they expect.

With inventory low, mortgage rates dropping, and a market that’s been holding back for some time, a stronger rebound in home prices seems more likely.