CoreLogic: Home Prices Hold Steady
CoreLogic, Irvine, Calif., said its Home Price Index showed nationally, home prices increased by 5.4% from a year ago. From a month ago, home prices increased by 1.4% from March.
Home-purchase activity slowed over March and April compared to last year as shelter-in-place orders, and an unprecedented spike in unemployment, dented home-buying activity fueled by millennials.
The report said the nationwide HPI of single-family attached units (condos, duplexes), the more affordable housing option, increased by 4.3% year over year in April, whereas the single-family detached increased by 5.7% year over year. This is indicative of home buyers continuing to take advantage of low rates — and therefore lower monthly payments — to purchase larger detached properties that may have otherwise been out of their price range.
Nationally, the for-sale inventory of entry-level homes plummeted on average 25% in April. CoreLogic Chief Economist Frank Nothaft said should this trend continue, an adverse effect on home sales in the near term could occur.
“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring,” Nothaft said. “If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states.”
According to the CoreLogic Market Condition Indicators, an analysis of housing values in the country’s 50 largest metropolitan areas based on housing stock, 40% of metropolitan areas had an overvalued housing market in April, while 18% were undervalued and 42% were at value. The HPI Forecast continues to show the inequality of home prices across metros. In overvalued markets such as Las Vegas and Miami, where the local tourism economy took a hit due to COVID-19, home prices are expected to decline by 7.2% and 4.4%, respectively, by April 2021.
CoreLogic said home price acceleration in April was supported by increased homes sales in the first quarter. Home price growth is expected to decelerate somewhat in May, with the CoreLogic HPI Forecast calling for a month-over-month increase of 0.3% compared to April. Looking ahead, the CoreLogic HPI Forecast predicts an annual price decline of 1.3% through April 2021. In 2021, home prices are expected to decline for the first time in more than nine years.
“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term,” said Frank Martell, president and CEO of CoreLogic. “The next 12 to 18 months are going to be very tough times for the broader economy. As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery.”
