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Home Price Increases Battle Tepid Sales; Forecast to Continue Rising into Mid-2020
CoreLogic’s latest home price index and forecast shows home prices rose both year over year and month over month. The Irvine, CA-based researcher’s CoreLogic Home Price Index (HPI) and HPI Forecast for June 2019 noted home prices increased nationally by 3.4% from June 2018. On a month-over-month basis, prices increased by 0.4% in June 2019.
“Tepid home sales have caused home prices to rise at the slowest pace for the first half of a year since 2011,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Price growth continues to be faster for lower-priced homes, as first-time buyers and investors are both actively seeking entry-level homes. With incomes up and current mortgage rates about 0.8 percentage points below what they were one year ago, home sales should have a better sales pace in the second half of 2019 than a year earlier, leading to a quickening in price growth over the next year.”
Single-family home prices stand at an all-time high and continue to increase on an annual basis, with the CoreLogic HPI Forecast indicating annual price growth will increase by 5.2% from June 2019 to June 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.5% from June 2019 to July 2019.
As of June 2019, 24% of the top 100 metropolitan areas were undervalued, and 38% were at value. When looking at only the top 50 markets based on housing stock, CoreLogic found 42% were overvalued, 16% were undervalued and 42% were at value.
A CoreLogic/RTi Research study found home-price increases in lower-cost homes disproportionately impact older millennials (ages 30 – 39). Additionally, this cohort is significantly more active in searching for a new home than any other age group. Nearly half (45%) say they purchased a home in the past three years, while 25% say they will likely do so within the next year.
CoreLogic’s Frank Martell says, “Millennial homebuyers are no longer a trend on the industry horizon. In fact, they are the new, first-time homebuyers of today.”
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