Home prices are projected to increase by 4.7 percent by February 2019, according to CoreLogic’s Home Price Index (HPI) and HPI Forecast released on Tuesday.
The CoreLogic HPI Forecast is a projection of home prices that's calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
The report, which also includes market condition indicators data, said that 34 percent of metropolitan areas had an overvalued housing market in February. On the other hand, 30 percent of the top 100 metropolitan areas were undervalued and 34 percent were at value.
Looking at the top 50 markets based on housing supply, the report found that 48 percent of these markets were overvalued while 18 percent were undervalued.
According to Frank Martell, President, and CEO of CoreLogic, these overvalued markets are likely to experience a deceleration in price growth. “CoreLogic’s Market Conditions Indicator has identified nearly one-half of the 50 largest metropolitan areas as overvalued,” Martell said. “Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth.”
The HPI forecast indicated that California will lead the climb with a forecasted 10.3 percent year-over-year change in pricing. However, its neighboring states that have seen a double-digit increase in prices in the last year are likely to slow down during the period.
“A number of western states have had hot housing markets,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “Idaho, Nevada, Utah, and Washington all had home prices up more than 11 percent over the last year. With the recent rise in mortgage rates, affordability has fallen sharply in these states. We expect home-price growth to slow over the next 12 months, dropping to 5 to 6 percent in Idaho, Utah, and Washington, and slowing to 9.6 percent in Nevada.”