CoreLogic: May Home Prices Rise as Falling Rates Provide ‘Shot in the Arm’

CoreLogic, Irvine, Calif., said home prices rose nationally by 3.6 percent annually in May, and by 0.9 percent from April, a sign that the market could be picking up after several months of price slowing.

The company’s monthly Home Price Index and HPI Forecast after several months of moderation earlier this year, the forecast suggests home prices could increase by 5.6% year over year; month-over-month, home prices are expected to increase by 0.8% from through June, bringing single-family home prices to a record high.

“Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May,” said CoreLogic Chief Economist Frank Nothaft. “This has been a shot-in-the-arm for home sales. Sales gained momentum in May and annual home-price growth accelerated for the first time since March 2018.”

According to the CoreLogic Market Condition Indicators 38% of the top 100 metropolitan areas have an overvalued housing market as of May. Twenty-four percent of the top 100 metropolitan areas were undervalued, while 38% were at value. Of the top 50 markets, 42% were overvalued, 16% were undervalued and 42% were at value.

CoreLogic and RTi Research, Norwalk, Conn., conducted a survey measuring consumer-housing sentiment in high-priced markets, showing 28% of homeowners reported they are concerned they won’t be able to afford buying a new home in the future. Only half of the respondents are satisfied with the number of options available in their market, and 40% of homeowners who are considering selling said they would have to move outside of their current market to afford another home.

“The recent and forecasted acceleration in home prices is a good and bad thing at the same time,” said Frank Martell, president and CEO of CoreLogic. “Higher prices and a lack of affordable homes are two of the most challenging issues in housing today, and every buyer, seller and industry participant is being impacted. The long-term solution lies in expanding supply, which will require aggressive and effective collaboration between policy makers, state and local government entities and home builders.”