CoreLogic Reports Strong Home Price Growth
Two things appear to be unchanged in the current mortgage market: home prices are going up; and despite that, consumers still want to buy homes.
CoreLogic, Irvine, Calif., said May home prices increased by 7.1 percent from a year ago, and by 1.1 percent from April. The company’s monthly Home Price Index report deemed 40 percent of U.S. markets as “over-valued.”
“The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes,” said Frank Nothaft, chief economist for CoreLogic. “During the first quarter, we found that about 50 percent of all existing homeowners had a mortgage rate of 3.75 percent or less. May’s mortgage rates averaged a seven-year high of 4.6 percent, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate.”
According to the CoreLogic Market Condition Indicators, 40 percent of the nation’s 100 largest metropolitan areas have an overvalued housing market as of May; 26 percent were undervalued and 34 percent were at value. When looking at only the top 50 markets based on housing stock, 52 percent were overvalued, 14 percent were undervalued and 34 percent were at value.
Looking ahead, the CoreLogic HPI Forecast projected the national home-price index to increase by 5.1 percent on a year-over-year basis through May 2019 and by 0.3 percent through June.
In a separate study, CoreLogic and RTi Research of Norwalk, Conn., said 15 percent of homeowners and 28 percent of renters indicated a desire to buy a home in the next 12 months, while only 11 percent have indicated a desire to sell.
The research reported the long-term desire for homeownership is much stronger among renters in markets that have the highest home-price growth. Lagging supply in these markets is likely to continue as fewer current homeowners are considering putting their homes on the market. Over the next 12 months, 41 percent of renters are considering buying while only 11 percent of homeowners are considering selling over that same period. That is nearly four times as many renters than homeowners, which is the crux of the available housing-supply imbalance.
“Despite high home prices, renters want to get out of their rental property and purchase a home,” said Frank Martell, president and CEO of CoreLogic. “Even in the most expensive markets, we found four times as many renters looking to buy than homeowners willing to sell. Until more supply becomes available, we will continue to see soaring prices in cities such as Denver, San Francisco and Seattle.”
