CoreLogic: Home Prices Remain Robust

CoreLogic, Irvine, Calif., said home prices in May continued to rise strongly year over year and month over month.

The company’s monthly Home Price Index said home prices increased by 1.2 percent in May from April and by 6.6 percent from a year ago.

The report noted price appreciation outstripped income growth in many markets, complicated by a lack of adequate housing inventory. CoreLogic said this inventory shortage is also tightening rental markets in many metro areas.

“The market remained robust with home sales and prices continuing to increase steadily in May,” said CoreLogic Chief Economist Frank Nothaft. “While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1 percent on a year-over-year basis in May of this year compared with May of last year.”

Nothaft noted rents in the affordable single-family rental segment–defined as properties with rents less than 75 percent of the regional median rent–increased by 4.7 percent over the past year, “well above the pace of overall inflation.”

States with the highest annualized home price appreciation in May were Washington (12.6 percent), Utah (10.4 percent), Colorado (9.7 percent), Oregon (9.0 percent) and Idaho (8.4 percent). Wyoming (-2.2 percent), West Virginia (-1.2 percent) and Alaska (-0.3 percent) were the only states in negative territory, followed by Delaware (0.4 percent), South Dakota (0.8 percent) and Connecticut (1.0 percent).

Among metros, Denver led in annualized home price growth (9.2 percent), followed by Las Vegas (7.3 percent), Los Angeles (6.4 percent), Boston (6.3 percent) and the Washington, D.C. metro area (4.7 percent).

Looking ahead, the CoreLogic HPI Forecast indicates home prices could increase by 5.3 percent year-over-year and by 0.9 percent month-over-month.

“For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending,” said CoreLogic President and CEO Frank Martell. “For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”