On an annual basis in November, home prices rose 3.7 percent, according to CoreLogic’s latest Home Price Index (HPI™) report. By November 2020, CoreLogic expects home prices to rise 5.3 percent.
According to Frank Nothaft, chief economist at CoreLogic, activity geared up in the latter part of the year, driven by low mortgage rates.
“The latest U.S. index shows that the slowdown in home prices we saw in early 2019 ended by late summer,” Nothaft says. “Growth in the U.S. index quickened in November and posted the largest 12-month gain since February. The decline in mortgage rates, down more than 1 percentage point for fixed-rate loans from November 2018, has supported a rise in sales activity and home prices.”
For first-time homebuyers, climbing costs impede prospects, especially for the segment’s youngest, explains Frank Martell, president and CEO of CoreLogic. According to an additional CoreLogic and RTi Research study, aged 30-38 millennials are “strongly considering moving” within the year, while those aged 21-29 are expecting to rent.
“We’re continuing to see a split among older and younger millennials when it comes to their plans to purchase a home,” Martell says. “While older millennials are looking forward to participating in the housing market in the future, their younger counterparts don’t see themselves buying a home anytime soon.
“With home prices expected to rise just over 5 percent over the next 12 months, affordability remains a concern for most prospective buyers,” adds Martell.
Thirty-four 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, according to the HPI report; 39 percent are at-value; and 27 percent are undervalued (“at least 10 percent below the long-term, sustainable” trend). Across the 50 largest markets, 40 percent are overvalued; 40 percent are at-value and 20 percent are undervalued.