September Home Price Reports: Your Results May Vary

CoreLogic, Irvine, Calif., said September home price growth slowed nationally to 3.5% from a year ago and to 0.4% from August.

However, a separate report from Black Knight, Jacksonville, Fla., said September national home price appreciation saw its largest single-month increase in nearly two years, buoyed by falling interest rates and the related boost in buying power/improved affordability adding fuel to what until recently had been a cooling housing market. Black Knight reported annual home price growth rate ticked up by 0.2% to 3.95% in September, the highest it’s been since March when home price growth was in the midst of 16-month slowing trend.

“Mortgage rates were a full percentage point lower this September compared to a year ago, boosting affordability for first-time buyers and supporting a rise in homeownership,” said CoreLogic Chief Economist Frank Nothaft. “In addition to lower interest rates, personal income grew faster than home prices during the past year. This provided an additional lift for first-time buyer affordability and helped to boost the homeownership rate to the highest level in more than five years.”

According to the CoreLogic Market Condition Indicators, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 36% of metropolitan areas have an overvalued housing market as of September. Twenty-three percent of the top 100 metropolitan areas were undervalued, and 41% were at value. When looking at only the top 50 markets based on housing stock, 40% were overvalued, 16% were undervalued and 44% were at value in September 2019, unchanged from August.

Looking ahead, CoreLogic said home prices continue to increase on an annual basis with the CoreLogic HPI Forecast indicating annual price growth to increase by 5.6% by September 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.3% from September to October.

During the second quarter, CoreLogic, with RTi Research of Norwalk, Conn., conducted an extensive survey measuring consumer-housing sentiment among millennials. The survey reported millennials are not particularly confident with their personal finances–nor the U.S. economy–compared to older generations. But, contrary to this lack of confidence, one in five millennials perceive buying a home as affordable, which is more optimistic compared to their older counterparts. Still, 42% of older millennials (30-38) said they spent more on their home purchase than expected, with new home buyers in this demographic spending an average of $383,000 on a home. This may be a factor that has caused initial down payments to be sourced from savings. The average home buyer in this cohort put a 16% down payment on their home, with nearly half of those funds coming from a 401(k) or retirement account.

“All 50 states posted positive home price trends in September with the average price nationally rising 3.5%,” said Frank Martell, president and CEO, CoreLogic. “As a group, more millennials are entering the home-buying market and they report spending more money than they anticipated. This may impact their future financial planning. Millennials age 30-38 put down less than 20% for a down payment over the past three years and used funds from their retirement accounts to cover an average of 7% of that down payment.”

Meanwhile, Black Knight reported strong home price gains in September after holding flat in August. The report said the average home price is now up 54% from the bottom of the market (in early 2012) and is 15% above the pre-crisis peak set in June of 2006.