Home Prices Rose 7.1% YOY in May
Irvine, CA, July 3, 3028- Home prices increased nationally by 7.1% year over year from May 2017 to May 2018, according to the CoreLogic Home Price Index (HPI).
On a month-over-month basis, prices increased by 1.1% in May 2018-compared with April 2018-according to the CoreLogic HPI.
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 May 2018 to May 2019. On a month-over-month basis, home prices are expected to rise 0.3% in June 2018.
“The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes,” said Dr. Frank Nothaft, chief economist for CoreLogic. “During the first quarter, we found that about 50% of all existing homeowners had a mortgage rate of 3.75% or less. May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate.”
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 found that 40% of metropolitan areas have an overvalued housing market as of May 2018. Additionally, as of May 2018, 26% of the top 100 metropolitan areas were undervalued and 34% were at value. When looking at only the top 50 markets based on housing stock, 52% were overvalued, 14% were undervalued and 34% 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% below the sustainable level.
In 2018, CoreLogic together with RTi Research of Norwalk, Connecticut, conducted an extensive consumer housing sentiment study, combining consumer and property insights. The study assessed attitudes toward homeownership and the drivers of the homebuying or renting decision process. Across the U.S., 15% of homeowners and 28% of renters have indicated a desire to buy a home in the next 12 months, while only 11% have indicated a desire to sell.
The research reported the long-term desire for homeownership is much stronger among renters in markets that have the highest home-price growth. Lagging supply in these markets is likely to continue as fewer current homeowners are considering putting their homes on the market. Over the next 12 months, 41% of renters are considering buying while only 11% of homeowners are considering selling over that same period. That is nearly four times as many renters than homeowners, which is the crux of the available housing-supply imbalance.
“The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and purchase a home,” said Frank Martell, president and CEO of CoreLogic. “Even in the most expensive markets, we found four times as many renters looking to buy than homeowners willing to sell. Until more supply becomes available, we will continue to see soaring prices in cities such as Denver, San Francisco and Seattle.”