U.S. home prices continued to rise in April, increasing 1.2% compared with March and 6.9% compared with April 2017, according to CoreLogic’s home price index report.
However, home price appreciation is forecast to flatten in the months to come: CoreLogic is predicting that prices will increase only 0.2% from April to May and will increase 5.3% on a year-over-year basis from April 2018 to April 2019.
The software, data and analytics firm reports that it’s home price data for March was revised, which could account for the smaller anticipated increase for May.
One of the major factors driving home prices higher is lack of inventory.
“The best antidote for rising home prices is additional supply,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures.”
According to the CoreLogic Market Condition Indicators (MCI), an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, about 40% of metropolitan areas as of April had an overvalued housing market.
About 28% of the top 100 metropolitan areas were undervalued and about 32% were at value.
When looking at only the top 50 markets based on housing stock, 52% were overvalued, 14% were undervalued and 34% were at value.
The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.
Last month, CoreLogic released its 2018 Storm Surge Report, which details the potential impact of the hurricane season (identified as June through November) on the U.S. mainland and territories.
In the report, Florida was identified as the most vulnerable state in the nation with 2.7 million homes at risk. $552 billion was the projected total cost to rebuild homes across the state if the maximum number of homes were impacted by a storm.
Despite the potential impact, Florida home prices increased by 0.6% month over month, and 5.8% year over year. Home prices in the Sunshine State are projected to continue to increase by 0.8% month over month and 7.5% year over year, respectively.
“Florida continues to show price resiliency after Hurricane Irma in 2017,” says Frank Martell, president and CEO of CoreLogic. “Despite the impact of the hurricane, prices were up 5.8 percent across the state compared to a year ago. CoreLogic data projects continued gains to home prices in Florida for the remainder of 2018. However, gains could be erased if a significant storm makes landfall again.”
