Despite the coronavirus pandemic and subsequent financial crisis, U.S. home prices continued to climb in March, rising 1.3% compared with February and rising 4.5% compared with March 2019, according to CoreLogic.
The firm is forecasting the home prices will continue to increase in April, rising 0.6% compared with March.
“Home prices for March reflect transactions negotiated primarily in the previous two months, prior to the implementation of the shelter-in-place policies,” says Frank Nothaft, chief economist at CoreLogic, in a statement. “Rapid decline of purchase activity starting in the middle of March can be seen in other CoreLogic data and is consistent with our HPI forecast of slowing price growth in April.
“The first quarter GDP results showed that the country entered a recession in March,” Nothaft adds. “Unemployment claims have reached record highs and this economic environment will further impact the housing market into the foreseeable future.”
How much home prices will be impacted by the COVID-19 crisis is difficult to forecast. Closed home sales fell 26% in the last two weeks of March as the economy officially entered a recession.
For now, CoreLogic is forecasting that home prices will remain basically flat for the remainder of this year.
“The CoreLogic U.S. Home Price Index is predicted to remain largely unchanged over the next year or so after a long uninterrupted run of appreciation,” says Frank Martell, president and CEO of CoreLogic. “Although the economic fallout from lockdown orders, put in place to fight the spread of COVID-19, will be profound, the basic supports for a rebound in home purchase activity remain in place. Once the shelter-in-place policies are lifted, we expect millennials, who submitted home-purchase applications well into the crisis, to lead the way back to a positive, purchase-driven housing cycle.”