The rise in US home prices has been impacted by increasing mortgage rates, which has dampened demand over the summer.
In figures published Tuesday, CoreLogic says that home prices gained just 0.1% in August compared to July, while the year-over-year growth was 5.5%.
However, the firm forecasts that prices will decrease 0.4% from August to September 2018 and slow to an annual rate of appreciation of 4.7% through August 2019.
“The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The slackening in demand is reflected in the slowing of national appreciation, as illustrated in the CoreLogic Home Price Index. National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year.”
Sellers still playing the waiting game
Although the national figures suggest cooling, most markets continue to see prices rising and that’s leading potential sellers to wait for higher returns.
CoreLogic’s data shows that among the top 50 markets based on housing stock, 46% were overvalued, 12% were undervalued and 42% were at value.
“In some markets, homebuyers and sellers are remaining cautious and taking a pause as price appreciation continues to rise,” said Frank Martell, president and CEO of CoreLogic. “By waiting to sell, homeowners believe they will get the greatest return on their investment; the more money they have for a down payment, the easier the purchase payments will be for their next home.”
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