U.S. home prices increased 0.7% in May compared with April and were up 4.8% compared with May 2019, according to CoreLogic.
But it won’t last: CoreLogic predicts that home price growth will stall in June and remain that way throughout the summer.
Further, the software, data and analytics firm forecasts that home prices will tumble 6.6% from May 2020 to May 2021, with all states expected to see a decline.
The firm’s Market Risk Indicator predicts 125 metro areas have at least a 75% probability of price decline by May 2021.
“Pending sales and home-purchase loan applications are higher than in June of last year and reflect the buying activity of millennials,” says Frank Nothaft, chief economist at CoreLogic, in a statement. “By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession.
While national home prices remained steady, the pandemic has created a volatile landscape for local housing markets. For example, single-family home prices in Philadelphia experienced an annual gain of 7.7% in May, compared to San Francisco’s 1.1%.
Essentially, CoreLogic is predicting that the COVID-19 crisis will have a delayed effect on the housing market later this year.
“Home-purchase activity, bolstered by record-low interest rates, continues to exceed expectations despite the severe recession,” says Frank Martell, president and CEO of CoreLogic. “Pent-up buyer demand was delayed from spring to summer and is reflected in the latest price data. But with elevated unemployment, purchase activity and home prices could fall off after summer.”