Home prices nationwide, including distressed sales, increased year over year by 3.6% in July
2019 compared with July 2018 and increased month over month by 0.5% in July 2019 compared
with June 2019, according to the most recent CoreLogic Home Price Insights report.
All states but Connecticut and South Dakota have experienced increases since July 2018, and the states with the highest increases year-over-year were Idaho (11.5%) Utah (8.4%), and Maine (7.7%).
“Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income. With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year,” said Dr. Frank Nothaft, CoreLogic’s chief economist.
The top 10 metros that experienced the biggest increases from last year, according to the HPI report, are Las Vegas (5.4%), Denver (3.7%), Washington, D.C. (3.6%), Boston (3.0%), Miami (3.0%), Houston (2.4%), Los Angeles (2.3%), Chicago (1.6%), San Diego (1.6%), and San Francisco (1.5%).
“Although the rise in home prices has slowed over the past several months, we see a reacceleration over the next year to just over 5% on an annualized basis. Lower rates are certainly making it more affordable to buy homes, and millennial buyers are entering the market with increasing force. These positive demand drivers, which are occurring against a backdrop of persistent shortages in housing stock, are the major drivers for higher home prices, which will likely continue to rise for the foreseeable future,” said Frank Martell, president and CEO of CoreLogic.
This isn’t great news for those buyers who are entering the market – and looking at the largest metro areas in the country based on housing stock, 37% of the cities actually have an overvalued housing stock as of July 2019, according to the analysis of data from CoreLogic Market Conditions Indicators (MCI). The MCI analysis compares home prices to their long-run sustainable levels that are supported by market fundamentals, such as disposable income. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level. In July, 40% of the top 100 metro areas were at value, and 23% were undervalued.
Recent Redfin data illuminates the disparity between home prices in walkable areas versus car-dependent locales; home prices in car-reliant places rose 4.3% year over year to a median $312,100 in July, and home prices in walkable areas grew to a median of $343,900, up 2.3% annually.
The CoreLogic HPI Forecast indicates that home prices will increase by 5.4% on a year-over-year basis from July 2019 to July 2020. On a month-over-month basis, home prices are expected to increase by 0.4% from July 2019 to August 2019.
The CoreLogic HPI report also included data from a recent survey conducted measuring consumer housing sentiment among millennials. The survey found that around 26% of respondents expressed an interest in buying a home in the next year, but only 8% wanted to sell their home in the next year.
“This means that new housing starts, or sellers from other age cohorts, will need to make up the necessary available housing stock to meet the demand. This desire to buy while housing stock is limited will continue to force prices up as buyers search for a home to purchase,” the report concluded.