U.S. home sales have slowed to a crawl this quarter, mostly due to an entrenched combination of low inventory and consistently rising prices. The latter was true again in March, according to the latest Home Price Index report from CoreLogic. The HPI for March found that over the last year, home prices nationally rose 7 percent.
From February, prices were up 1.4 percent, but in year-over-year comparisons, CoreLogic found that all 50 states saw prices escalate since March of 2017.
“Home prices grew briskly in the first quarter of 2018,” said Frank Nothaft, Chief Economist at CoreLogic. “High demand and limited supply have pushed home prices above where they were in early 2006. New construction still lags historically normal levels, keeping upward pressure on prices.”
The largest annual gains happened in Washington and Nevada, where, CoreLogic found, home prices grew by 12.6 percent since last March. What's more, CoreLogic expects prices to keep climbing and expects U.S. home prices to be 5.2 percent higher by next March. Prices are expected to rise 0.1 percent in April.
Of the 100 largest metropolitan areas, based on housing stock, 37 have an overvalued housing market as of March, the report stated.
“Additionally, as of March 2018, 28 percent of the top 100 metropolitan areas were undervalued and 35 percent were at value” it stated.
When looking at the top 50 markets, CoreLogic found that half were overvalued. Seven were undervalued and 18 were at value.”
CoreLogic president and CEO Frank Martell called this dynamic a clearly “unsustainable condition that can only be remedied by aggressive and coordinated public/private sector actions.”
According to Martell, rising home prices would remain a sober reality facing a lot of would-be buyers until it was “straightened out.”
“The dream of homeownership continues to fade away for the average prospective buyer,” he said. “Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis progressively worse.”