CoreLogic: Home Prices Persist at 7% Annual Pace

CoreLogic, Irvine, Calif., said home prices rose in October at a 7 percent annual rate for the second month in a row and at nearly a 1 percent rate month over month.

“Single-family residential sales and prices continued to heat up in October,” said Dr. Frank Nothaft, chief economist for CoreLogic. “On a year-over-year basis, home prices grew in excess of 6 percent for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”

The company’s Home Price Index said 37 percent of metropolitan areas have an “overvalued” housing stock as of October. Just 26 percent of the top 100 metropolitan areas were “undervalued” and 37 percent were “at value.” When looking at only the top 50 markets based on housing stock, 50 percent were overvalued, 14 percent were undervalued and 36 percent were at value

Looking ahead, the CoreLogic HPI Forecast projeced home prices to increase by 4.2 percent on a year-over-year basis through October 2018, and by 0.2 percent on a month-over-month basis through November.

“The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk,” said Frank Martell, president and CEO of CoreLogic. “However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges.

According to the CoreLogic Single-Family Rent Index, rents paid by entry-level renters for single-family homes rose by 4.2 percent annually through October, compared to overall single-family rent growth of 2.7 percent over the same period.