U.S. home prices increased 0.4% in June compared with May and were up 3.4% compared with June 2018, as the rate of appreciation continued to slow, CoreLogic’s home price index report shows.
The firm reports that home price growth has essentially stabilized in most areas of the country.
In most areas, home prices will continue to grow, only at a slower pace.
In June, Idaho, Utah and Nevada experienced the greatest year-over-year increases among states.
Currently, CoreLogic is forecasting that U.S. home prices will increase 5.2% by June 2020.
On a month-over-month basis, the forecast calls for home prices to increase by 0.5% from June to July.
“Tepid home sales have caused home prices to rise at the slowest pace for the first half of a year since 2011,” says Frank Nothaft, chief economist at CoreLogic, in a statement. “Price growth continues to be faster for lower-priced homes, as first-time buyers and investors are both actively seeking entry-level homes.
“With incomes up and current mortgage rates about 0.8 percentage points below what they were one year ago, home sales should have a better sales pace in the second half of 2019 than a year earlier, leading to a quickening in price growth over the next year,” Nothaft adds.
As of the end of June, 38% of metropolitan areas had a housing market that was considered “overvalued,” as per CoreLogic’s Market Condition Indicators (MCI), which categorizes home prices in individual markets as undervalued, at value or overvalued, by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income.
About 24% of the top 100 metropolitan areas were “undervalued” and 38% were “at value.”
Recent research conducted by CoreLogic and RTi Research of Norwalk, Conn., shows that home price increases in lower-cost homes disproportionately impacted older millennials (ages 30 to 39) in the second quarter.
This cohort is significantly more active in searching for a new home than any other age group, the research shows.
Nearly half (45%) say they purchased a home in the past three years, while 25% say they will likely do so within the next year.
While affordability concerns drive older millennials toward renting, they have more positive market perceptions than older generations and 37% say purchasing a home within their market is at least somewhat affordable.
“Millennial homebuyers are no longer a trend on the industry horizon,” says Frank Martell, president and CEO of CoreLogic. “In fact, they are the new, first-time homebuyers of today. However, only about half of recent millennial buyers were satisfied with the number of options of available homes in their market or price range. Affordable housing continues to be a growing issue. A deeper look at the data shows that 43% of those surveyed indicated they couldn’t afford to buy a new home or are concerned they won’t be able to.”