This story was originally published in Builder.
December home prices rose nationally by 4.7% year over year from December 2017 and by 0.1% from November 2018, according to the CoreLogic® (NYSE: CLGX) Home Price Index (HPI™) and HPI Forecast™ for December 2018.
Annual home price growth peaked in March and averaged 6.4% during the first six months of 2018. In the second half of the year, growth moderated to 5.2%.
Looking ahead, the CoreLogic HPI Forecast indicates home prices will increase by 4.6% on a year-over-year basis from December 2018 to December 2019. Comparing the annual average HPI and HPI forecast for 2018 and 2019, average price growth is forecasted to slow from 5.8% to 3.4%. On a month-over-month basis, home prices are expected to decrease by 1% from December 2018 to January 2019.
“Higher mortgage rates slowed home sales and price growth during the second half of 2018,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Annual price growth peaked in March and averaged 6.4% during the first six months of the year. In the second half of 2018, growth moderated to 5.2%. For 2019, we are forecasting an average annual price growth of 3.4%.”
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, 33% of metropolitan areas have an overvalued housing market as of December 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 December 2018, 27% of the top 100 metropolitan areas were undervalued, and 40% were at value.
When looking at only the top 50 markets based on housing stock, 40% were overvalued, 18% were undervalued and 42% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% above 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 survey measuring consumer-housing sentiment, combining consumer and property insights. The study assessed attitudes toward homeownership and the driving force behind the decision to buy or rent a home. When renters were asked how interested they were in owning a home or residence, 36% felt homeownership would allow them to fulfill a dream and provide a place to raise a family. Conversely, 45% of those surveyed claimed they could not afford to buy or take on the responsibility of ownership at this time. As home-price increases cool while incomes rise, we expect buyer affordability to improve and home sales to pick up.
“The slowdown in the rate of home price appreciation reflects the impact of inventory shortages and growing affordability issues in many markets,” said Frank Martell, president and CEO of CoreLogic. “On the positive side, if home-price growth continues to moderate, interest rates remain stable and household incomes rise in 2019, it could help renters and first-time buyers to take the plunge and realize the dream of owning a home.”
This story was originally published in Builder.
