Despite the economic ups and downs brought on by the pandemic, the housing market is still going strong. As supply and demand pressures endure and construction costs spike, in June, home price gains reached the highest annual growth since 1979.
… The pandemic sparked an increase in buyer desire for lower density neighborhoods and more living space – both inside and outside their home …
While affordability challenges intensify, low mortgage rates, rising savings and an improving labor market are helping to keep homeownership within reach for many prospective buyers. However, CoreLogic projects home price gains may slow over the next 12 months as demand moderates and for-sale inventory rises.
Dr. Frank Nothaft, chief economist at CoreLogic stated:
The pandemic sparked an increase in buyer desire for lower density neighborhoods and more living space — both inside and outside their home. Communities with single-family detached houses fill this need. Detached homes had the highest annual growth in June since the inception of the CoreLogic Home Price Index in 1976.
- Nationally, home prices increased 17.2% in June 2021, compared to June 2020. On a month-over-month basis, home prices increased by 2.3% compared to May 2021.
- In June, appreciation of detached properties (19.1%) was the highest measured since the inception of the index and nearly double that of attached properties (10.7%) as prospective buyers continue to seek more living space and lower density communities.
- Home price gains are projected to slow to a 3.2% increase by June 2022, as ongoing affordability challenges deter some potential buyers and an uptick in new for-sale listings cause a slowdown in home price growth.
- In June, home prices rose sharply in the west with Twin Falls, Idaho, experiencing the highest year-over-year increase at 40.2%. Bend, Oregon, ranked second with a year-over-year increase of 35.4%.
- At the state level, Idaho and Arizona continued to have the strongest price growth at 34.2% and 26.1%, respectively. Montana also had a 24.3% year-over-year increase as home buyers seek out more affordable locations with lower population density and attractive outdoor amenities.
HPI Case-Shiller Trends – Year-over-Year Growth.
Frank Martell, president and CEO of CoreLogic stated:
Home prices have been rising in the mid-single digits for some years now. The recent surge to double-digit price jumps reflect the convergence of exceptional demand and persistent low supply. With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future.
Caveats Relating to Home Price Indices
There is no such thing as an “accurate” home price index. CoreLogic HPI is a repeat sales-type index that should not be skewed by changes in the mix of home sales. For more information, please read: http://www.philadelphiafed.org/research-and-data/publications/research-rap/2014/house-price-indexes.pdf
The CoreLogic HPI™ is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 40 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the CoreLogic HPI is designed to provide an early indication of home price trends by market segment and for the “Single-Family Combined” tier representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties. The indexes are fully revised with each release and employ techniques to signal turning points sooner. The CoreLogic HPI provides measures for multiple market segments, referred to as tiers, based on property type, price, time between sales, loan type (conforming vs. non-conforming) and distressed sales. Broad national coverage is available from the national level down to ZIP Code, including non-disclosure states.
CoreLogic HPI Forecasts™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, CoreLogic HPI Forecasts project CoreLogic HPI levels for two tiers—”Single-Family Combined” (both attached and detached) and “Single-Family Combined Excluding Distressed Sales.” As a companion to the CoreLogic HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, adverse and severely adverse scenarios at state, CBSA and ZIP Code levels. The forecast accuracy represents a 95-percent statistical confidence interval with a +/- 2.0 percent margin of error for the index.