U.S. home prices increased 0.9% in October compared with September and were up 7% compared with October 2016, according to CoreLogic’s home price index report.
The software, data and analytics firm forecasts that home prices will increase 0.2% in November compared with October and will rise by 4.2% from October 2017 to October 2018.
“Single-family residential sales and prices continued to heat up in October,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “On a year-over-year basis, home prices grew in excess of six percent for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”
“The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk,” adds Frank Martell, president and CEO of CoreLogic. “However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges. According to the CoreLogic Single-Family Rent Index, rents paid by entry-level renters for single-family homes rose by 4.2 percent from October 2016 to October 2017 compared with overall single-family rent growth of 2.7 percent over the same time.”
CoreLogic estimates that the housing stock in about 37% of the top 100 largest U.S. metros is currently “overvalued,” based on the average home price.