U.S. home prices increased 0.7% in June compared with May and were up 6.8% compared with June 2017, as Washington, Nevada, Idaho and Utah again posted double-digit annual gains, CoreLogic’s home price index report shows.
Currently the software, data and analytics firm is forecasting that home prices will rise by 5.1% by June 2019.
As home prices continue to rise, there is an increasing focus on affordability and the impact on home sales.
In a survey recently conducted by RTi Research, two thirds of “younger” millennials (under age 29) say they are desirous of homeownership while one third say they are not. Of that one third that is not interested right now, 63% point to the affordability issue, as well as inability to come up with a down payment, as reasons why.
Meanwhile, the desire for homeownership among younger millennials is stronger when compared with other cohorts. This underscores the obstacles that millennials face in the current housing market.
“The rise in home prices and interest rates over the past year have eroded affordability and are beginning to slow existing home sales in some markets,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “For June, we found in CoreLogic public records data that home sales in the San Francisco Bay Area and Southern California were down nine and 12 percent, respectively, from one year earlier. Further increases in home prices and mortgage rates over the next year will likely dampen sales and home-price growth.”
According to the CoreLogic Market Condition Indicators, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 41% of metropolitan areas had an overvalued housing market as of June.
“Millennial renters report feeling they cannot afford a down payment to buy a home,” adds Frank Martell, president and CEO of CoreLogic. “With home prices rising quickly over the past few years and supplies low, first-time homebuyers face ever-growing challenges to find and buy affordable entry-level homes. More needs to be done to help our first-time buyers join the homeownership class.”