U.S. home prices increased 0.5% in October compared with September and were up 5.4% compared with October 2017, according to CoreLogic.
However, the rate of increase has slowed: October marked the fourth consecutive month that the annual home price appreciation fell below 6%, the firm’s home price index shows.
CoreLogic is forecasting that home prices will increase 0.7% from October to November and will rise 4.8% by the end of October 2019.
North Dakota was the only state with a year-over-year decrease in October.
Meanwhile, West Virginia, Nevada and Idaho posted double-digit growth.
Frank Nothaft, chief economist for CoreLogic, says rising home prices and rising interest rates “have reduced home buyer activity,” which, in turn, has “led to a gradual slowing in appreciation.”
“October’s mortgage rates were the highest in seven and a half years, eroding buyer affordability,” Nothaft says in a statement.
It’s not that renters don’t want to buy – there is pent-up demand – it’s just that prices are often too high.
“Despite higher interest rates, many renters view a home purchase as a way to build wealth through home-equity growth, especially in areas where rents are rising quickly,” Nothaft says. “These include the Phoenix, Las Vegas and Orlando metro areas, where the CoreLogic Single-Family Rent Index rose six percent or more during the last 12 months.”
CoreLogic estimates that 35% of the top 100 largest cities in the U.S. had an “overvalued” housing market as of the end of October. About 24% were “undervalued” and 41% were “at value.”
Of course, home price appreciation and affordability can vary considerably from neighborhood to neighborhood, even within these top 100 markets.