Analysts are anticipating home prices to tick up, but decelerated to a lesser pace, according to CoreLogic’s latest Home Price Index (HPI®) report.
CoreLogic data found that May prices rose 1.1 percent month-over-month and 7.1 percent year-over-year. According to a forecast in the report, prices will have risen 0.3 percent in June, and increase 5.1 percent through May 2019.
Additionally, 40 percent of the 100 largest markets are overvalued, a condition CoreLogic defines as when “home prices are at least 10 percent higher than the long-term, sustainable” trend; 34 percent are at value, and 26 percent are undervalued (“at least 10 percent below the long-term, sustainable” trend).
According to Dr. Frank Nothaft, chief economist for CoreLogic, the dynamic is not in favor of first-time homebuyers, and, more homeowners are staying put, intensifying the inventory shortage.
“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,” says Dr. Nothaft. “During the first quarter, we found that about 50 percent of all existing homeowners had a mortgage rate of 3.75 percent or less. May’s mortgage rates averaged a seven-year high of 4.6 percent, 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.”
In an illustration of the imbalance in the market, 15 percent of homeowners and 41 percent of renters are aiming to buy a home in the next year, but only 11 percent of homeowners are planning to sell, according to a separate study by CoreLogic and RTi Research.
“The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and purchase a home,” says Frank Martell, CEO/president 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.”
For more information, please visit www.corelogic.com.
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