US home prices keep reaching record highs

But experts and homebuyers expect price appreciation to decelerate in the next six months

US home prices keep reaching record highs

US home prices posted a 19.1% year-over-year increase in January – the highest level in at least 45 years – but potential homebuyers showed cautious optimism, CoreLogic reported.

Month over month, home prices edged up by 1.4% nationally in January, according to the latest CoreLogic Home Price Index. The annual appreciation of detached properties (20.3%) was 5.1% higher than that of attached properties (15.2%).

CoreLogic said consumers looking to buy a home have stayed optimistic moving into the new year despite market and economic headwinds such as low inventory, intense competition, and declining affordability. According to the report, more homebuyers expect to purchase over the next six months as rapid home price appreciation is forecast to slow to a 3.8% annual increase.

“In December and January, for-sale inventory continued to be the lowest we have seen in a generation,” said CoreLogic chief economist Frank Nothaft. “Buyers have continued to bid prices up for the limited supply on the market. However, the rise in mortgage rates since January further eroded buyer affordability and is expected to slow price gains in coming months.”

Read more: US mortgage rates take a break after weeks of consecutive increases

According to Freddie Mac, the 30-year mortgage rate averaged 3.89% for the week ending Feb. 24. Meanwhile, construction of new homes slowed to an annualized rate of 1.64 million units, the Census Bureau said.