The CoreLogic Home Price Index (HPI) and HPI Forecast for March 2021 suggest that as consumer confidence rebounds and the job market picks back up, the 2021 spring home-buying season is on track to outpace trends seen in 2019 and 2018.
Millennials lead the home-buying charge, with older millennials seeking move-up purchases and younger millennials entering peak home-buying years.
Looking into the second half of the year, further erosion of affordability may dampen purchase demand as prospective buyers continue to compete for the severely limited supply of for-sale homes, according to the company. A pickup in construction and an increase in for-sale listings as more people get vaccinated may help moderate surging home price growth.
“Despite the severe slowdown last year, the 2021 spring home-buying season is trending strong – reflecting the many positive signs of economic recovery,” says Frank Martell, president and CEO of CoreLogic. “With prospective buyers continuing to be motivated by historically low mortgage rates, we anticipate sustained demand in the summer and early fall.”
Nationally, home prices increased 11.3% in March 2021, compared with March 2020. On a month-over-month basis, home prices increased by 2% compared to February 2021.
Home prices are projected to increase 3.5% by March 2022, as intensifying affordability challenges narrow the pool of potential buyers and are likely to drive a slowdown in home price growth.
In March, home prices rose sharply in the West, with seven of the 10 metros ranked with the highest year-over-year increases. Boise, Idaho, ranked at the top, with a year-over-year increase of 27.7%.
Similarly, at the state level, two Mountain-West states – Idaho and Montana – had the strongest price growth in March, up 25% and 18.8% respectively, as they continue to see an uptick in inbound migration from buyers moving away from more costly coastal areas. Arizona had the third-strongest price growth, with an 18% increase.
“Lower-priced homes are in big demand and short supply, driving up prices faster compared to their more expensive counterparts,” says Dr. Frank Nothaft, chief economist at CoreLogic. “First-time buyers seeking a starter home priced 25% or more below the local-area median saw prices jump 15.1% during the past year, compared with the overall 11.3% gain in our national index.”