Home Prices Rose 6.8% YOY in June, Says CoreLogic
Irvine, CA, August 13, 2018--Home prices increased nationally by 6.8% year over year from June 2017 to June 2018, according to the CoreLogic Home Price Index (HPI). On a month-over-month basis, prices increased by 0.7% in June 2018 compared with May 2018.
Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 5.1% on a year-over-year basis from June 2018 to June 2019. On a month-over-month basis, home prices are expected to be flat from June to July 2018.
“The rise in home prices and interest rates over the past year have eroded affordability and are beginning to slow existing home sales in some markets,” said Dr. Frank Nothaft, chief economist for CoreLogic. “For June, we found in CoreLogic public records data that home sales in the San Francisco Bay Area and Southern California were down 9% and 12%, respectively, from one year earlier. Further increases in home prices and mortgage rates over the next year will likely dampen sales and home-price growth.”
According to the CoreLogic Market Condition Indicators (MCI), an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 41% of metropolitan areas have an overvalued housing market as of June 2018. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued, by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals (such as disposable income). Additionally, as of June 2018, 24% of the top 100 metropolitan areas were undervalued, and 35% were at value. When looking at only the top 50 markets based on housing stock, 54% were overvalued, 14% were undervalued and 32% were at value. 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. An undervalued housing market is one in which home prices are at least 10 percent below the sustainable level.
In 2018, CoreLogic together with RTi Research of Norwalk, Conn., conducted an extensive consumer housing sentiment study, combining consumer and property insights. The study assessed attitudes toward homeownership and the drivers of the home buying or renting decision process. Across the U.S., the desire to own a home is significantly higher among those in younger age cohorts. Younger millennial renters (those under the age of 29) are significantly more likely to want to buy a home in the next 12 months than older millennial or Generation X renters. However, affordability for this group is a significant issue. Sixty-three percent of younger millennials who are not interested in home ownership identified the inability to afford a home or down payment as the reason they are not interested in buying at this time. This is compared with 50% of older millennial renters and 52% of Generation X renters. For their part, boomer generation renters say their lack of interest in home ownership is driven by a lack of need at this stage in their lives.
“One-third of millennial renters reported feeling they cannot afford a down payment to buy a home,” said Frank Martell, president and CEO of CoreLogic. “With home prices rising quickly over the past few years and supplies low, first-time homebuyers face ever-growing challenges to find and buy affordable entry-level homes. More needs to be done to help our first-time buyers join the homeownership class.”