CoreLogic® recently released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for November 2020. Nationally, home prices increased 8.2 percent in November 2020, compared with November 2019, marking the largest annual appreciation since March 2014. On a month-over-month basis, home prices increased by 1.1 percent compared to October 2020.
Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply. The continued rise in home prices increases down payment requirements and exacerbates the housing market’s affordability issues, leaving lower-income families in rentals and priced-out of the home-purchase market. Slowing buyer demand, coupled with more supply in the coming year, is reflected in the CoreLogic HPI Forecast, which shows annual home price growth slowing from 7.5 percent during the first quarter of 2021 to 2.5 percent by November 2021. However, possible stimulus actions could help spur home buyer demand among low- and middle-income families and support stronger home price growth.
“The housing market performed remarkably well in 2020 despite the volatile economic state,” said Frank Martell, president and CEO of CoreLogic. “While we can expect to see lingering effects of COVID-19 resurgences and subsequent shutdowns in the early months of 2021, vaccine distributions and stimulus actions should revitalize economic activity and keep home purchase demand and home price growth strong.”
“The demographic tailwind has arrived as Generation X and millennials drive housing demand,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Lower-priced home values increased about one and a half times faster than higher-priced home values in November, as first-time buyers tend to seek out homes within the lower price ranges.”
Despite the rapid acceleration of national home price growth, local markets continue to vary. For instance, in Phoenix, where there is a severe shortage of for-sale homes, prices continued to surge, increasing 12.6 percent year-over-year in November. Meanwhile, the New York-Jersey City-White Plains metro recorded a smaller-than-average annual increase of 3.2 percent, as residents continue to seek out more space in less densely populated areas. At the state level, Idaho, Maine and Indiana experienced the strongest price growth in November, up 15.7 percent, 15.4 percent and 13.6 percent, respectively.
The HPI Forecast also reveals the disparity in home price growth across metros. In markets like Houston, which was hit hard by the collapse of the oil industry and the recent hurricane season, home prices are expected to decline 1.4 percent by November 2021. Conversely, in San Diego, home prices are forecasted to increase 8.3 percent over the next 12 months as low inventory continues to increase prices.
The CoreLogic Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts that metros such as Miami; Lake Charles, Louisiana and Prescott, Arizona, are at the greatest risk (above 70 percent) of a decline in home prices over the next 12 months, while Brownsville-Harlingen, Texas, and Gulfport-Biloxi-Pascagoula, Miss., are at moderate risk (50 percent-70 percent) of a decrease.
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