Home prices during August recorded a 5.9% increase from one year earlier, according to CoreLogic’s latest Home Price Index (HPI) data report. This represents the highest annual growth on the HPI since June 2018.
On a monthly measurement, August’s HPI was up by nearly 1% July, when home prices increased 5.1% year-over-year. CoreLogic attributed much of the upward pressure on home price appreciation to dramatic declines in housing inventory – August saw a 17% year-over-year plummet in for-sale properties.
“Consumers who have not been as financially impacted by the ongoing economic pressures are taking advantage of low mortgage rates to either break into the market, upgrade their living situations or purchase second homes and investment properties,” said Frank Martell, President and CEO of CoreLogic. “With heightened activity putting a strain on the current for-sale inventory, strong demand should help spur new homebuilding activity.”
The new CoreLogic HPI follows the company’s recent Home Equity Report that found overall equity for homeowners with mortgages rose 6.6% over the past year while the number of mortgaged properties with negative equity decreased by 15% in the second quarter to 1.7 million or 2%. The HPI for the second quarter recorded a 4.3% annual rise in prices.
Looking ahead, CoreLogic’s HPI Forecast pointed to a downshift in prices during early 2021 as annual HPI gains slow to only 0.2% by August 2021 and many metro areas begin to experience price declines. CoreLogic theorized that a greater availability of both new and existing homes for sale coupled with high unemployment rates will result in a weakened buyer demand.
However, CoreLogic acknowledged that certain markets will be more lethargic than others, while some will exhibit greater degrees of vibrancy. As examples, the company predicted that difficulties in the tourism economy and job market in Las Vegas will drive home prices down by 6.5% in a year from now, while a continuation of low inventory rates will pump San Francisco home prices up by 7.8% over the next 12 months.