Annual US home price growth saw a double-digit spike in January, figures from CoreLogic’s latest report showed.
The CoreLogic Home Price Index (HPI) bumped up 10% year over year – the first double-digit annual appreciation since November 2013. Month over month, home prices rose 0.9% from December.
“Record-low mortgage rates were a significant driving force behind last year’s rebound in housing market activity,” said Frank Martell, president and CEO of CoreLogic. “However, heavy competition for the few houses on the market drove home prices to historic highs, and mortgage rates are no longer enough to sway the affordability challenges for consumers. While new construction may help balance home prices towards the end of 2021, we may expect to see demand slow in the medium-term.”
Gains across all of the top 10 metro areas eclipsed their January 2020 levels. In San Diego, home prices jumped 11% annually and are expected to climb 9.6% over the next 12 months.
“Despite first-time buyers driving high demand, entry-level homes remain in short supply,” said CoreLogic Chief Economist Frank Nothaft. “Homes priced below 75% of the local median price had 14% annual appreciation, negating most of the benefits of record-low mortgage rates. When interest rates rise, the affordability squeeze for first-time buyers will become even more of a challenge.”