Home price appreciation continued to slow in January, with prices rising an average of 0.1% compared with December and up 4.4% compared with Jan vary 2018, according to CoreLogic’s home price index.
It was the slowest annual growth rate since August 2012.
Basically, home price appreciation has slowed to a crawl since last April. However, it should be noted that there can be major disparities in home price growth from market to market; the HPI is based on the average cost of a U.S. single-family home.
CoreLogic is forecasting that home price appreciation will continue to decelerate in the months to come. Currently, the firm is forecasting that home prices will decrease 0.9% from January to February. Prices are forecast to increase 3.4% over the next 12 months.
“The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “Fixed-rate mortgage rates have dropped 0.6 percentage points since November 2018 and today are lower than they were a year ago. With interest rates at this level, we expect a solid home-buying season this spring.”
As of January, about 35% of the top 100 largest metropolitan areas had an “overvalued” housing market. About 27% were “undervalued” while 38% were “at value.”
“The slowing growth in home prices was inevitable in many respects as buyers pull back in the face of higher borrowing and ownership costs,” says Frank Martell, president and CEO of CoreLogic. “As we head into 2019, we can expect continued strong employment growth and rising incomes which could support a re-acceleration in home-price appreciation later this year.”