CoreLogic: U.S. Home Prices Continued to Climb in December

U.S. home prices increased 0.5% in December compared with November and were up 6.6% compared with December 2016, according to CoreLogic’s home price index.

Currently, CoreLogic is forecasting that home prices will increase by 4.3% on a year-over-year basis from December 2017 to December 2018 and 0.4% from December to January.

“The number of homes for sale has remained very low,” says Frank Nothaft, chief economist for CoreLogic. “Job growth lowered the unemployment rate to 4.1 percent by year’s end, the lowest level in 17 years. Rising income and consumer confidence has increased the number of prospective homebuyers. The net result of rising demand and limited for-sale inventory is a continued appreciation in home prices.”

According to CoreLogic Market Condition Indicators (MCI) data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 35% of metropolitan areas had an “overvalued” housing market as of December.

About 28% of markets were “undervalued,” and 37% were “at value.”

“Home prices continue to rise as a result of aggressive monetary policy, the economic and jobs recovery and a lack of housing stock,” says Frank Martell, president and CEO of CoreLogic. “The largest price gains during 2017 were in five Western states: California, Idaho, Nevada, Utah and Washington. As home prices and the cost of originating loans rise, affordability continues to erode, making it more challenging for both first-time buyers and moderate-income families to buy. At this point, we estimate that more than one-third of the 100 largest metropolitan areas are overvalued.”

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