CoreLogic: U.S. Home Prices 50% Higher than 2011 Bottom

CoreLogic, Irvine, Calif., said U.S. home prices jumped by nearly 7 percent from a year ago and have reclaimed nearly 50 percent of value since bottoming out in 2011.

The company’s monthly Home Price Index report said home prices increased by 1.1 percent in June from May and by 6.7 percent from a year ago. Since bottoming out in March 2011, home prices have rebounded by 50 percent.

Washington saw the highest year-over-year growth at 12.7 percent, followed by Utah (10.7 percent), Colorado (9.2 percent) and Oregon (9.0 percent). Alaska was the only state to see a decline (0.6 percent), followed by Delaware (0.3 percent), Connecticut (0.4 percent) and West Virginia (0.9 percent).

CoreLogic Chief Economist Frank Nothaft said the figures send a mixed signal. “The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory,” he said. “As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.”

The report also cautioned that several markets appear to be “overvalued.” Of the nation’s 10 largest metropolitan areas measured by population, CoreLogic rated four as overvalued in June: Denver, Houston, Miami and Washington, D.C. CoreLogic defines an overvalued market as one in which home prices are at least 10 percent higher than the long-term, sustainable level, while an undervalued market is one in which home prices are at least 10 percent below the sustainable level.

“Home prices are marching ever higher, up almost 50 percent since the trough in March 2011,” said Frank Martell, president and CEO of CoreLogic. “With no end to the escalation in sight, affordability is rapidly deteriorating nationally and especially in some key markets such as Denver, Houston, Miami and Washington. While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”

Looking ahead, the CoreLogic HPI Forecast suggests home prices will increase by 5.2 percent on a year-over-year basis through June 2018, and by 0.6 percent through July.