Flying in the face of the COVID-19 crisis, U.S. home prices increased 1.4% in April compared with March and were up 5.4% compared with April 2019, according to the CoreLogic Home Price Index.
“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring,” says Frank Nothaft, chief economist at CoreLogic, in a statement. “If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states.”
But for the first time in years, home prices may be soon be set for a reversal: Currently, CoreLogic is forecasting that home prices will fall 1.3% from April 2020 to April 2021, due mainly to the fallout from the crisis.
However, there is potential for the housing market to bounce-back quickly.
“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term,” says Frank Martell, president and CEO of CoreLogic. “The next 12 to 18 months are going to be very tough times for the broader economy. As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery.”