No Letup in Home Price Gains; CoreLogic Reports 8.2% Annual Growth
CoreLogic, Irvine, Calif., said its November U.S. Home Price Index saw its largest annual appreciation since March 2014.
The report said nationally, home prices increased by 8.2% in November from a year ago. On a month-over-month basis, home prices increased by 1.1% from October.
CoreLogic said home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
“The housing market performed remarkably well in 2020 despite the volatile economic state,” said Frank Martell, president and CEO of CoreLogic. “While we can expect to see lingering effects of COVID-19 resurgences and subsequent shutdowns in the early months of 2021, vaccine distributions and stimulus actions should revitalize economic activity and keep home purchase demand and home price growth strong.”
CoreLogic noted while the pandemic left many in positions of financial insecurity, those who maintained employment and income stability were also incentivized to buy, given record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply. The continued rise in home prices increases down payment requirements and exacerbated the housing market’s affordability issues, leaving lower-income families in rentals and priced-out of the home-purchase market.
Slowing buyer demand, coupled with more supply in the coming year, is reflected in the CoreLogic HPI Forecast, which shows annual home price growth slowing from 7.5% during the first quarter of 2021 to 2.5% by November. However, CoreLogic Chief Economist Frank Nothaft said possible stimulus actions could help spur home buyer demand among low- and middle-income families and support stronger home price growth.
“The demographic tailwind has arrived as Generation X and millennials drive housing demand,” Nothaft said. “Lower-priced home values increased about one and a half times faster than higher-priced home values in November, as first-time buyers tend to seek out homes within the lower price ranges.”
The report said despite rapid acceleration of national home price growth, local markets continue to vary. For instance, in Phoenix, where there is a severe shortage of for-sale homes, prices continued to surge, increasing 12.6% year over year in November. Meanwhile, the New York-Jersey City-White Plains metro recorded a smaller-than-average annual increase of 3.2%, as residents continue to seek out more space in less densely populated areas. At the state level, Idaho, Maine and Indiana experienced the strongest price growth in November, up 15.7%, 15.4% and 13.6%, respectively.
The HPI Forecast also reveals the disparity in home price growth across metros. In markets like Houston, which was hit hard by the collapse of the oil industry and the recent hurricane season, home prices are expected to decline 1.4% by November 2021. Conversely, in San Diego, home prices are forecasted to increase 8.3% over the next 12 months as low inventory continues to increase prices.
The CoreLogic Market Risk Indicator, a monthly update of the overall health of housing markets across the country, predicts that metros such as Miami; Lake Charles, La. and Prescott, Ariz., are at the greatest risk (above 70%) of a decline in home prices over the next 12 months, while Brownsville-Harlingen, Texas, and Gulfport-Biloxi-Pascagoula, Mississippi, are at moderate risk.