CoreLogic: U.S. Home Price Appreciation Jumps in August
Despite pandemic pressures, home prices increased 5.9 percent year-over-year in August, reported CoreLogic, Irvine, Calif.
The gain was up nearly 1 percent compared to the prior month, when home prices increased 5.1 percent year-over-year, the CoreLogic U.S. Home Price Index report found.
“Consumers who have not been as financially impacted by the ongoing economic pressures are taking advantage of low mortgage rates to either break into the market, upgrade their living situations or purchase second homes and investment properties,” said CoreLogic President and CEO Frank Martell. “With heightened activity putting a strain on the current for-sale inventory, strong demand should help spur new homebuilding activity.”
Consumer home-purchasing power has stayed strong in part because mortgage rates remain at record lows. Meanwhile, for-sale inventory continues to dwindle, dropping 17 percent year-over-year in August, creating upward pressure on home price appreciation as buyers compete for a limited supply of homes.
CoreLogic said it expects home price growth to slow as greater availability of new and existing homes are placed for sale in 2021 and elevated unemployment saps buyer demand. The firm’s Home Price Index Forecast said prices could start to “downshift” in early 2021, with annual U.S. HPI gains slowing to just 0.2 percent by August 2021 and many locations experiencing a decline in prices.
“The imbalance between homebuyer demand and for-sale inventory is particularly acute for lower-priced homes,” said CoreLogic Chief Economist Frank Nothaft. Because of this imbalance, homes priced more than 25 percent below the median increased 8.6 percent in price over the last year, compared with the 5.9 percent price increase for all homes, he noted.
Though national home price growth continues, local market performance varies significantly, the report said. For instance, in Phoenix, where there is a severe shortage of for-sale homes, prices increased 9.8 percent in August. Meanwhile, the New York-Jersey City-White Plains metro recorded an annual decline in home prices of -0.1 percent as residents opted for more space and privacy in less populated areas. Idaho, Arizona and Maine experienced the strongest price growth in August, up 10.8 percent, 9.7 percent and 9.6 percent, respectively, CoreLogic said.