The expected surge in the number of homes for sale has not yet materialized and the resulting tight supply is among the factors leading to higher prices.  In a report released this morning, CoreLogic's president and CEO Anand Nallathambi said that "many homeowners are staying put and waiting for better economic times and higher prices in the future."

The CoreLogic Home Price Index (HPI) including distressed sales (bank owned real estate (REO) and short sales) rose 7.5 percent on an annual basis in June.  It was the 28^th consecutive month of year-over-year gains in the index which also increased by 1.0 percent from May to June.  Despite the prolonged period of price increases, CoreLogic said prices nationwide are still 12.9 percent below the peak established in April 2006.

The HPI that excludes distressed sales increased by 6.9 percent on an annual basis and was up .9 percent compared to May.  That index remains 9.0 percent below the peak.

Excluding distressed sales all 50 states and the District of Columbia showed annual price increases in June with the largest being in Massachusetts at 11.2 percent, New York at 9.8 percent, and Hawaii and California at 9.2 and 9.1 percent respectively.  Increases in the HPI including distressed sales were greatest in Michigan at 11.5 percent followed by California (11.3 percent), and Nevada (11.1 percent). 

Twenty-eight states and the District are within 10 percent of their respective HPI peaks with Nevada, Florida, Arizona, Rhode Island, and New Jersey still showing the greatest deficits, ranging from -37.5 in Nevada to 22.2 in New Jersey.

Nallathambi said another factor behind the continued rise in prices is interest rates which, despite increases from record levels, still remain at historic lows.  Aggressive investor buying on the East and West coasts are also contributing to price gains.

CoreLogic projects that its HPI which includes distressed sales will rise 0.7 percent from June to July and by 5.7 percent from June 2014 to June 2015.  The HPI excluding distressed sales is projected to increase 0.6 percent from June to July and by 5.0 percent for the year ending in June 2015.

Mark Fleming, CoreLogic's chief economist said "The pace of home price appreciation is cooling off quickly as the weather warms up.  May's 8.8 percent year-over-year growth rate is down almost three percentage points from just three months ago.  The influences of modestly rising inventory and less-than-expected demand are causing price growth to moderate toward our forecasted expectations."