Photo: Marco Nurnberger/Flickr
Homebuyers in the US continued to struggle with rising home prices, with new highs being recorded in 15 states in March. But the real bad news for those struggling with housing affordability, according to a new report by CoreLogic, is that home prices are expected to hit a new peak this summer.
The CoreLogic Home Price Index (HPI) rose 1.6 percent from the previous month in March for single-family homes, including distressed sales (properties usually in or close to foreclosure or in dire need of repair). Single-family home prices were up 7.1 percent year-over-year, including distressed sales. And excluding distressed sales, home prices were up 1.5 percent from the previous month and nearly 6 percent year-over-year, says CoreLogic’s data.
March marked the 62nd consecutive month of annual price gains. CoreLogic predicts home prices will rise 0.6 percent this month, and by almost 5 percent by March 2018.
Last month, home prices were 2.8 percent below peak values recorded in April 2006. However, prices are expected to reach a new peak this August, predicts CoreLogic.
Home prices hit new highs in 15 states in March, including Massachusetts, New York, and Washington, while only two states recorded negative home price appreciation — West Virginia and Alaska, says CoreLogic’s data.
Washington State recorded the largest annual price gains of all the 50 states, 12.8 percent including distressed sales and 12 percent excluding distressed sales.
The five states that remained furthest from their peaks in March were Nevada (nearly 30 percent), Connecticut (nearly 21 percent), Florida (20.2 percent), Maryland (19.6 percent) and Arizona (19.4 percent)
“Prices in more than half the country have surpassed their previous peaks, and almost 20 percent of metros are now at their peaks. Nationally, price growth has gradually accelerated over the last year,” says CoreLogic’s chief economist Dr. Frank Nothaft.
And although home prices are getting closer to pre-crisis peaks, Dr. Nothaft says there is a remote chance of a “bubble” developing.
“A major cause of the bubble was easy credit and loose underwriting, helping to fuel speculation. Today credit standards are ‘tighter’, more similar to what they were 20 years ago,” Dr. Nothaft tells BuzzBuzz News.
Additionally, even thought the national index is 3 percent below its 2006 peak in nominal value, once we adjust for inflation over the past 11 years, the index “in inflation-adjusted terms is currently about 22 percent below its peak,” Dr. Nothaft adds.
Demand for housing has been driven by low mortgage rates, rising household income, and the rise in consumer confidence, according to Dr. Nothaft.
“Consumer confidence is at the highest level in 17 years and reflects the greater financial and economic security that consumers feel today. At the same time, the for-sale inventory is low. Rising demand coupled with limited supply leads to multiple purchase contracts on homes, bidding ‘wars’, and rising home prices,” he says.
Click here to read the entire report.