U.S. home prices continued their upward march in August, rising 0.9% compared with July and 6.9% compared with August 2016, according to CoreLogic’s home price index report.
States that saw the greatest appreciation in home prices were Washington and Utah, both with double-digit year-over-year increases.
Las Vegas led the major U.S. cities in terms of home price growth, rising 8.4%, year-over-year.
However, CoreLogic forecasts that the rate of appreciation will slow over the next year. Currently, the software, data and analytics firm is forecasting that home prices will increase only 4.7% by the end of August 2018 – a far slower pace than the 6.9% seen during the past 12 months.
In fact, the slowdown may have already begun: The firm is forecasting that home prices will increase only 0.1%, month-over-month, from August to September.
“While growth in home sales has stalled due to a lack of inventory during the last few months, the tight inventory has actually helped stabilize price growth,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “Over the last three years, price growth in the CoreLogic national index has been between five percent and seven percent per year, and CoreLogic expects home prices to increase about five percent by this time next year.”
It is inevitable – and part of the normal cycle – that home prices will eventually see some leveling off. In fact, CoreLogic’s analysis finds that 34% of housing stock in the major cities is now “overvalued.” Prices have been rising much faster in the major metropolitan areas, starting with the cities on the West Coast but more recently moving to cities in the central states.
“Nearly half of the nation’s largest 50 markets are overvalued,” says Frank Martell, president and CEO of CoreLogic. “The lack of real estate affordability has spread beyond the typically expensive coasts into the interior of the nation, hitting cities such as Denver, Nashville, Austin and Dallas.”