Home price appreciation continued to slow in February, which could, in turn, help stimulate home sales this spring.
Which could, in turn, cause prices to rise faster again.
Home prices increased 0.7% compared with January and were up 4% compared with a year earlier, according to CoreLogic’s home price index report.
In January the year-over-year rate was 4.4%, and in December it was 4.7%.
Also, an increasing number of states are now seeing their annual home prices move into negative territory, including North Dakota which saw home prices decrease 1.7% compared with February 2018.
Other states, such as Idaho, continue to see double-digit increases; home prices in that state were up 10.2% year-over-year in February.
CoreLogic notes that its January 2018 data was revised.
Currently, the firm is forecasting that home prices will pick up some steam again within the next 12 months and will increase 4.7% by February 2020.
“During the first two months of the year, home-price growth continued to decelerate,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “This is the opposite of what we saw the last two years when price growth accelerated early.
“With the Federal Reserve’s announcement to keep short-term interest rates where they are for the rest of the year, we expect mortgage rates to remain low and be a boost for the spring buying season,” Nothaft adds. “A strong buying season could lead to a pickup in home-price growth later this year.”
CoreLogic’s Market Condition Indicators (MCI), an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, shows that 35% of metropolitan areas had an overvalued housing market as of February. About 27% were undervalued and 38% were at value.
When looking at only the top 50 markets, 40% were overvalued, 18% were undervalued and 42% were at value.
Frank Martell, president and CEO of CoreLogic, says the percentage of markets that are overvalued will likely grow this year.
“The cost of either buying or renting in expensive markets puts a significant strain on most consumers,” Martell says. “Our research tells us that about 74 percent of millennials, the single largest cohort of homebuyers, now report having to cut back on other categories of spending to afford their housing costs.”