US home price annual growth in August hit its highest level in more than two years, according to the latest report from CoreLogic.
The CoreLogic Home Price Index (HPI) was up 5.9% year over year in August and nearly 1% higher than in July, when home prices rose 5.1% annually. A 17% year-over-year decline in for-sale inventory created upward pressure on home-price growth in August as competition continued to intensify across the country, according to the report.
"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 Frank Martell, president and CEO of CoreLogic. "With heightened activity putting a strain on the current for-sale inventory, strong demand should help spur new home building activity."
CoreLogic expects the home-price appreciation rate to slow as new and existing homes enter the market next year and heightened unemployment weakens buyer demand. According to the HPI Forecast, a downturn in prices will start in early 2021, with annual HPI gains decelerating to just 0.2% by August 2021 and several locations seeing price drops.
CoreLogic Chief Economist Frank Nothaft said that the disparity between homebuyer demand and for-sale inventory is particularly acute for lower-priced homes.
"Because of this imbalance, homes priced more than 25% below the median were up 8.6% in price over the last year, compared with the 5.9% price increase for all homes," he said.