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Home price growth continued to slow on an
annual basis in March. The CoreLogic
Home Price Index (HPI) shows home prices increased from the previous March by
3.7 percent. The annual growth rates in
January and February were 4.4 percent and 4.0 percent respectively.
On a month-over-month basis prices grew by
1.0 percent, the same as in January.
Prices had spiked by 0.4 percent in February.
The company’s deputy
chief economist Ralph McLaughlin said, “The U.S. housing market continues to cool,
primarily due to some of our priciest markets moving into frigid waters. But
the broader market looks more temperate as supply and demand come into balance.
With mortgage rates flat and inventory picking up, we expect more buyers to
take advantage of easing housing market headwinds.”
Price increases continued in every state on an
annual basis except North Dakota, with the largest gains in Idaho, up 10.5
percent, Maine (9.1 percent) and Utah (7.8 percent). Nevada leads again among metropolitan
areas with an annual gain of 8.0 percent.
The company does not expect the shrinking
appreciation rate to last. Its HPI
forecast for March 2020 anticipates an annual increase of 4.8 percent. It also expects acceleration as the spring
market begins, with a gain of 0.3 percent from March 2018 to April.
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 figure below shows a comparison
of the national year-over-year percent change for the CoreLogic HPI and
CoreLogic Case-Shiller Index from 2000 to present month with forecasts one year
into the future. 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.
Respondents to CoreLogic’s 1st
Quarter Consumer Housing Sentiment Study indicated that high home prices have
an impact on rental prices as well. Nearly 76% of renters and buyers in
high-priced markets agreed housing prices in these markets appeared to be
driving rental rates up.
President and CEO of Corelogic says the cost of housing, whether buying or
renting, in expensive markets puts a significant strain on most consumers. “Nearly half of survey
respondents – 44% of renters – cited the cost to rent in high-priced housing
markets as the number one barrier to entry into homeownership. This is
potentially forcing renters to wait longer to have the necessary down payment
in these communities,” he said.
CoreLogic says that 35 percent of
the country’s 100 largest metropolitan areas based on housing stock, were
overvalued in March. The company’s Market
Conditions Indicators (MCI) categorize home prices in individual markets as
undervalued, at value or overvalued by comparing home prices to their long-run,
sustainable levels as supported by local market fundamentals such as disposable
income. An overvalued housing market as one in which home prices are at least
10 percent higher than the long-term, sustainable level, while an undervalued
housing market is one in which home prices are at least 10 percent lower. Twenty-six percent of the markets were undervalued,
and 39 percent were at value. Within the top 50 markets based on housing stock,
40 percent were overvalued, 16 percent were undervalued, and 39 percent were at