CoreLogic: Home Price Increases Slow to 4%
CoreLogic, Irvine, Calif., said while home prices continued to rise year over year and month over month, the pace of appreciation slowed to just 4 percent annually.
The company’s monthly Home Price Index showed home prices increased nationally in February by 4 percent year over year from a year ago. On a month-over-month basis, prices increased by 0.7 percent from January.
Annual change by state ranged from a 10.2 percent high in Idaho to a -1.7 percent low in North Dakota.
“During the first two months of the year, home-price growth continued to decelerate,” said CoreLogic Chief Economist Frank Nothaft. “This is the opposite of what we saw the last two years when price growth accelerated early. With the Federal Reserve’s announcement to keep short-term interest rates where they are for the rest of the year, we expect mortgage rates to remain low and be a boost for the spring buying season. A strong buying season could lead to a pickup in home-price growth later this year.”
According to the CoreLogic Market Condition Indicators, 35 percent of metropolitan areas have an overvalued housing market as of February. Twenty-seven percent of the top 100 metropolitan areas were undervalued, while 38 percent were at value. When looking at only the top 50 markets based on housing stock, 40 percent were overvalued, 18 percent were undervalued and 42 percent were at value in February.
CoreLogic said looking ahead, after some initial moderation in early 2019, the CoreLogic HPI Forecast indicates home prices will begin to pick up and increase by 4.7 percent on a year-over-year basis through February 2020. On a month-over-month basis, home prices are expected to decrease by 0.5 percent from February to March.
During the first quarter, CoreLogic together with RTi Research of Norwalk, Conn., conducted a survey measuring consumer-housing sentiment in high-priced markets. In all, 62 percent of residents in high-priced markets acknowledged that housing in these markets was unaffordable, compared to only 11 percent of respondents across all markets surveyed last year. Nearly three quarters of renters (71 percent) in these high-priced markets felt their housing costs were unaffordable, compared to just 16 percent of renters across all markets last year. High-priced markets were identified as the 15 metropolitan areas with the highest median home prices. The study focused on the dynamics of housing decision making and the impact that the housing market had on the attitudes and perceptions of residents in high-priced markets.
“About 40 percent of the top 50 largest metropolitan areas in the country are now categorized as overvalued and we expect that percentage to grow over the remainder of 2019,” said Frank Martell, president and CEO of CoreLogic. “The cost of either buying or renting in expensive markets puts a significant strain on most consumers.
CoreLogic said nearly 74 percent of millennials, the single largest cohort of homebuyers, now report having to cut back on other categories of spending to afford their housing costs.”
