CoreLogic Says Strong Home Price Growth Stays Hot
CoreLogic, Irvine, Calif., said housing markets, particularly in the West, stayed hot in February, with more than 6 percent annual growth for the seventh consecutive month.
The company’s monthly Home Price Index reported national home prices rose by 6.7 percent year over year and by 1 percent from January. All 50 states saw home price gains in February, with Washington’s pace at a sizzling 12.5 percent.
“A number of western states have had hot housing markets,” said Frank Nothaft, chief economist for CoreLogic. “Idaho, Nevada, Utah and Washington all had home prices up more than 11 percent over the last year. With the recent rise in mortgage rates, affordability has fallen sharply in these states.”
According to CoreLogic Market Condition Indicators data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 34 percent of metropolitan areas have an overvalued housing market as of February. Thirty percent of the top 100 metropolitan areas were undervalued and 36 percent were at value. When looking at only the top 50 markets based on housing stock, 48 percent were overvalued, 18 percent were undervalued and 34 percent were at value.
Looking ahead, the CoreLogic HPI Forecast projects the national home-price index to increase by 4.7 percent on a year-over-year basis from through February 2019, with California leading the climb at a forecasted 10.3 percent year-over-year change.
However, Nothaft offered a glimmer of hope for prospective home buyers: “We expect home-price growth to slow over the next 12 months, dropping to 5 to 6 percent in Idaho, Utah and Washington, and slowing to 9.6 percent in Nevada,” he said.
“Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new homebuyers,” said Frank Martell, president and CEO of CoreLogic. ” Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth.”