Home prices including distressed sales increased by 9.2% in December 2020 compared with December 2019, according to CoreLogic's latest Home Price Index report covering December. Month-over-month, those prices increased by 1% compared to November.
CoreLogic's HPI Forecast suggests home prices will increase on a month-over-month basis by 0.2% from December 2020 to January 2021, and on a year-over-year basis by 2.9% from December 2020 to December 2021.
“At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market." said Frank Martell, CoreLogic's CEO and President. "However, market conditions leading into the crisis — namely low home supply, desire for more space and millennial demand — amplified the rapid acceleration of home prices.”
Two record lows are driving the gains in home prices, says CoreLogic's Chief Economist Frank Nothaft. That is, record low for-sale inventory and record-low mortgage rates.
"Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated," Nothaft said. "We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”
On a national scale, home prices increased 9.2% year over year in December. No states posted an annual decline in home prices. The states with the highest increases year-over-year were Idaho (19.1%), Indiana (16.1%), and Maine (15.2%).
CoreLogic further breaks down the home price data by metros, showing Phoenix leading the home-price-increase way at 13.7% year over year.
Conversely, The HPI Forecast also reveals the continued disparity in regional home price growth.
"In markets like Houston, which was hit hard by the collapse of the oil industry and the recent hurricane season, home prices are expected to decline 1% by December 2021," the report showed.
CoreLogic's Market Risk Indicator, its monthly update of the overall health of housing markets nationwide, predicts that metros such Lake Charles, Louisiana, and Prescott, Arizona, are at the greatest risk (above 70%) of a decline in home prices over the next year, while Miami, Beaumont-Port Arthur, Texas, and Modesto, California, are at moderate risk (50%-70%) of a decrease.
For the full report and methodology, visit CoreLogic.com/insights.