According to the latest CoreLogic Home Price Index (HPI) Report, the national home prices increased 4.4 percent year over year in January 2019 and are forecast to increase 4.6 percent from January 2019 to January 2020. The HPI gain in January this year was a slowdown compared to 6.1 percent around the same period last year.
“The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth,” said Frank Nothaft, Chief Economist at CoreLogic. “Fixed-rate mortgage rates have dropped 0.6 percentage points since November 2018 and today are lower than they were a year ago. With interest rates at this level, we expect a solid home-buying season this spring.”
The CoreLogic HPI Forecast indicated that 2019 annual average home price will rise 3.4 percent above the annual average the year prior. On a month-over-month basis, home prices are expected to decline by 0.9 percent from January 2019 to February 2019.
Thirty-five percent of metropolitan areas have an overvalued housing market as of January 2019, revealed data from the CoreLogic Market Condition Indicators (MCI) which analyzed housing values in the country’s 100 largest metropolitan areas based on housing stock. Additionally, the MCI found that as of January 2019, 27 percent of the top 100 metropolitan areas were undervalued, and 38 percent were at value.
Taking into account only the top 50 markets based on housing stock, the report showed 40 percent were overvalued, 18 percent were undervalued and 42 percent were at value in January 2019.
The MCI analysis defines an overvalued housing market as one in which home prices are at least 10 percent above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10 percent below the sustainable level.
Frank Martell, President and CEO at CoreLogic said, “The slowing growth in home prices was inevitable in many respects as buyers pull back in the face of higher borrowing and ownership costs. Looking ahead, Martell is optimistic and expects “continued strong employment growth and rising incomes which could support a reacceleration in home-price appreciation later this year.”
The next CoreLogic HPI press release, featuring February 2019 data, will be issued on Tuesday, April 2, 2019, at 8:00 a.m. ET.