Home Prices Continue Upward, Defying Predictions

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February looks as though it may be yet another month
when the long-predicted end to rising rates of home appreciation was supposed
to happen and didn’t.  CoreLogic, the
first to report on home prices for the month, says home prices nationally
increased 6.7 percent
from February 2017 to the same month this year compared
to a 12-month change in January of 6.6 percent. 
Home prices nationwide, including distressed sales, were up 1.0 percent month-over-month
in February.   

Prices
were up in every state, with western states continuing to outpace most of the
rest of the nation.   The states with the highest increases February were:
Washington (12.5%), Nevada (12.2%), Utah (11.1%) and Idaho (10.2%).

Frank Nothaft, CoreLogic’s Chief
Economist, said “A number of western states have had hot housing markets,
Idaho, Nevada, Utah and Washington all had home prices up more than 11 percent
over the past year.  With the recent rise
in mortgage rates, affordability has fallen sharply in these states.  We expect home-price growth to slow over the
next 12 months, dropping to 5 to 6 percent in Idaho, Utah and Washington, and
slowing to 9.6 percent in Nevada.”

 

 

The company forecasts an increase of 4.7 percent in national home prices from
February 2018 to February 2019 and no appreciable increase from February 2018
to March.  The CoreLogic HPI Forecast is
a projection of home prices using the CoreLogic HPI and other economic
variables. Values are derived from state-level forecasts by weighting indices
according to the number of owner-occupied households for each state.

The graph below compares the national year-over-year percent change for the
CoreLogic HPI and CoreLogic Case-Shiller Index from 2000 to February 2018, with
forecasts one year into the future. CoreLogic notes that both the CoreLogic HPI
Single Family Combined tier and the CoreLogic Case-Shiller Index are posting
positive, but moderating year-over-year percent changes, and forecasting gains
for the next year.

 

 

CoreLogic’s President and CEO Frank
Martell said, “Family income is rising more slowly than home prices and
mortgage rates, meaning that the mortgage payment takes a bigger bite out of
income for new homebuyers.  CoreLogic’s
Market Conditions Indicator has identified nearly one-half of the 50 largest
metropolitan areas as overvalued.  Often
buyers are lulled into thinking these high-priced markets will continue, but we
find that overvalued markets will tend to have a slowdown in price growth.”



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