U.S. home prices continued their upward march in February, rising 1% compared with January and increasing 6.7% compared with February 2017, according to CoreLogic’s home price index report.
All 50 states saw home prices rise on a year-over-year basis, with Washington leading the way with a 12.5% increase.
CoreLogic reports that it revised its home price data for January.
The firm is forecasting that home prices will increase 4.7% between February 2018 and February 2019, with California leading the climb at a forecasted 10.3%.
“A number of western states have had hot housing markets,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “Idaho, Nevada, Utah and Washington all had home prices up more than 11 percent over the last year. With the recent rise in mortgage rates, affordability has fallen sharply in these states. We expect home-price growth to slow over the next 12 months, dropping to five to six percent in Idaho, Utah and Washington, and slowing to 9.6 percent in Nevada.”
According to the firm’s Market Condition Indicators (MCI) data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 34% of metropolitan areas had an overvalued housing market as of February.
When looking at only the top 50 markets based on housing stock, 48% were overvalued, according to the report.
The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.
“Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new homebuyers,” says Frank Martell, president and CEO of CoreLogic. “CoreLogic’s Market Conditions Indicator has identified nearly one-half of the 50 largest metropolitan areas as overvalued. Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth.”