Home price appreciation is slowing across there U.S., CoreLogic’s home price index report for August shows – yet many homeowners say they are waiting until the market peaks before putting their home on the market.
Home prices increased a mere 0.1% in August compared with July and were up 5.5% compared with August 2017, according to the report.
Month-over-month, home prices increased by 0.3% in July compared with June; by 0.7% in June compared with May; and by 1.1% in May compared with April, according to CoreLogic’s earlier reports (however, the firm’s data is frequently revised). Nonetheless, this trend shows the recent deceleration.
Home price growth has been slowing gradually since about the end of the first quarter.
Nevada and Idaho were the only states to post double-digit annual price growth in August.
Currently, CoreLogic is forecasting that U.S. home prices will increase 0.4% from August to September and by 4.7% from August 2018 to August 2019.
“The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “The slackening in demand is reflected in the slowing of national appreciation.
“National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year,” Nothaft adds.
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, 38% of metropolitan areas had an overvalued housing market as of August.
As of the end of the month,18% of the top 100 metropolitan areas were undervalued, and 44% were at value.
When looking at only the top 50 markets based on housing stock, 46% were overvalued, 12% were undervalued and 42% 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.
An undervalued housing market is one in which home prices are at least 10% below the sustainable level.
CoreLogic’s report cites recent research from RTi Research showing that many homeowners are waiting to sell their homes to see if they can get a better price.
Many intend to use proceeds from the sale of their current home to fund the downpayment of their next home.
The research shows that 66% of homeowners who are considering buying in the next 10 years will need to sell their current homes to finance their next one.
